Can I avoid a wash sale by selling in Roth IRA first?

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ishkadetto
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Joined: Thu May 24, 2018 2:49 pm
Location: California, USA

Can I avoid a wash sale by selling in Roth IRA first?

Post by ishkadetto »

Say you have shares of VTIAX in both taxable and in a Roth IRA and you purchased shares in both accounts within the past 30 days.

If you exchange in the Roth IRA your entire amount of VTIAX for something else, then the next day sell the shares of VTIAX in taxable that are a loss (and additionally any shares that were purchased within the past 30 days even if they are not at a loss), would this avoid a wash sale?

I'm thinking yes because at the time you sell VTIAX in taxable you have no other shares of it in the Roth that could be considered "replacement" shares?
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samsoes
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Re: Can I avoid a wash sale by selling in Roth IRA first?

Post by samsoes »

You are correct.

Keep all trade confirmations for the shares involved in both accounts, however, in case Uncle IRS comes calling with questions.
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Earl Lemongrab
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Re: Can I avoid a wash sale by selling in Roth IRA first?

Post by Earl Lemongrab »

It's the general feeling around here, although I don't think the IRS has affirmed that. The theory is that as the "replacement shares" no longer exist when the sale is made, there's no wash. That would certainly be true for shares held in taxable, as there would be no shares to adjust the basis on for the wash.
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