Assigning adjustment code X to an open leg of a trade will exempt that trade from wash sale calculations. The trade will not be considered a "replacement" position and therefore will not trigger a wash sale.
Take Note: if the shares/contracts opened are subsequently closed at a loss, that loss may be deferred to a future date if another substantially identical position is opened. In other words: code X does not prevent a loss from becoming a wash sale.
How and when might this code be used? If substantially identical shares/contracts are acquired in an event that not "fully taxable" according to IRS rules, then those shares/contracts opened should not trigger a wash sale if there were losses within +/- 30 days. Examples may be: shares that were inherited, or shares received as part of a spin-off or stock split. Please consult with a tax advisor regarding your specific situation and whether shares/contracts received should be exempt from wash sale rules.