TLH dividend timing

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northstar22
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Joined: Mon Jul 16, 2012 8:30 pm

TLH dividend timing

Post by northstar22 » Tue Dec 08, 2015 12:29 pm

I did a TLH a couple months ago of Vanguard total international (VTIAX) into VFWAX for $12k in losses. Since then there's been a bit of a gain in both ($3k), but I think I'd like to switch back to VTIAX to simplify my portfolio. I believe both are scheduled for a dividend next week. My question is how I should time the switch back.

Right now I am planning to exchange VFWAX for VTIAX after the dividend distribution, with the thought that this will cause the lowest STCG in VFWAX and result in a larger loss carried forward to use against future income (33% bracket). The dividend should be mostly qualified.

Alternatively I am considering avoiding the dividend by selling VFWAX next Monday and buying VTIAX after the dividend distribution.

Thanks for any thoughts.

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House Blend
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Re: TLH dividend timing

Post by House Blend » Tue Dec 08, 2015 12:59 pm

FWIW, I would not realize $3K in gains just for the sake of simplification. You are wasting a chance to deduct $3K against ordinary income in the tax year 2018. (Your other $9K of losses will cover 2015-17.)

livesoft
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Re: TLH dividend timing

Post by livesoft » Tue Dec 08, 2015 1:02 pm

I think you are needlessly increasing your taxes for no benefit. I suggest you do nothing and save on your taxes.
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northstar22
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Re: TLH dividend timing

Post by northstar22 » Tue Dec 08, 2015 2:12 pm

livesoft wrote:I think you are needlessly increasing your taxes for no benefit. I suggest you do nothing and save on your taxes.
I appreciate this feedback. It would be nice to have just 1 total international fund, but perhaps not worth the tax hit. Maybe I'll just hope they both continue to drop so I can TLH again (and buy some more).

livesoft
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Re: TLH dividend timing

Post by livesoft » Tue Dec 08, 2015 2:16 pm

Actually, I think it is nice to have more than one international fund in taxable. That way, you don't run up against some of Vanguard's insecurities. Suppose you sell some VFWAX to pay expenses, but then a week later you get a gift of $10,000 that you want to reinvest in international funds. So you just add it to your VTIAX despite Vanguard's objections to prevent you from adding to your VFWAX.
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grabiner
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Re: TLH dividend timing

Post by grabiner » Wed Dec 09, 2015 10:32 pm

livesoft wrote:Actually, I think it is nice to have more than one international fund in taxable. That way, you don't run up against some of Vanguard's insecurities. Suppose you sell some VFWAX to pay expenses, but then a week later you get a gift of $10,000 that you want to reinvest in international funds. So you just add it to your VTIAX despite Vanguard's objections to prevent you from adding to your VFWAX.
With most banks, you wouldn't even have a delay in getting around the frequent-trading restriction by making your purchase by mail. A large check would be subject to a hold of a few days by your bank, so you couldn't buy Vanguard funds with it on the day you deposit it; you could write your own check against the deposit and mail it to Vanguard to arrive on the day the gift check clears.
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