In late December I sold a Vanguard non-tax-sheltered mutual fund and realized a long-term capital gain to avoid taking a future gain at a potentially higher rate. A few days later I bought back the same fund (more shares than I sold). However, duh, I forgot to check Vanguard's dividend schedule and I ended up buying myself another LT (and a smaller ST) gain, as well as a an unrealized ST capital loss that would, if realized, offset the capital gain I just bought. If I understand the wash rules, I could sell the shares I just bought and the rules wouldn't apply because the shares I sold are not replacement shares as per the IRS definition, but rather are identical shares.
I hope this is correct so far. Now here are my concerns: Because the dividends and gains were added back to my holdings, I own more shares than I bought a couple of days earlier. Does that in some way mess up the "identical shares" rule? Second, when I bought the fund, I also added the same fund to a position in an IRA. I know capital losses can be "lost" via the wash rule if one buys a an identical fund in an IRA, but since my proposed sale does not constitute a replacement, I assume I have no exposure to the IRA rule. Yes? No?
I hope this makes sense. My inclination is to take my lumps and use the unrealized loss at a later date. After all, it's my own stupid mistake that got me into this. But I would like to know the tax consequences. If I am to sell, I have to do it Monday. Thanks.
PS If I want to buy back the fund again within 60 days, I'll have to ask Vanguard's permission in writing to avoid their churning rules. Life becomes difficult when you do stupid things!