What is a disallowed wash sale?

Wash sales and disallowed wash sales are two names for the same thing. Wash sales can't be deducted in the year of the sale, so they're often called disallowed wash sales. If you have a wash sale (or disallowed wash sale), the loss isn't gone forever, you just can't claim it until later. You add the loss to the cost basis of the identical stock you purchased. Then, when you sell that stock (in a non-wash-sale transaction), the loss is factored in to lower the gain or increase the loss you report on your tax return.