I made a wash sale, can I fix it?

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MikeMak27
Posts: 104
Joined: Fri Jul 03, 2015 4:37 am

I made a wash sale, can I fix it?

Post by MikeMak27 » Thu Nov 08, 2018 11:52 am

In September of 2017, I bought a sizeable amount of IEMG. I subsequently bought small amounts through reinvesting of dividends and small purchases in Dec 2017, Jun 2018, Jul 2018, Aug 2018, Sep 2018, and Oct 3, 2018. Today (Nov 8), I bought quite a bit more. Then, I sold all of the original shares (from Sep 2017 thru Oct 3, 2018) thinking I was doing tax loss harvesting. Unfortunately, I misinterpreted what the wash sale was. I would still like to tax loss harvest this all. Can I wait until December 10th, then sell all IEMG and get the tax harvest loss back (assuming there isn't a massive rise in its price before then)? I would really like to be able to tax harvest loss it for 2018 since I sold an investment property for a large gain this year.
Mac 4 fund portfolio: 45% US small cap value (IJS, VBR), 40% Emerging Markets (IEMG, VWO, FPMAX), 10% long term US treasuries (TLT), 5% US REITS (VNQ)

magicrat
Posts: 459
Joined: Sat Nov 29, 2014 7:04 pm

Re: I made a wash sale, can I fix it?

Post by magicrat » Thu Nov 08, 2018 1:01 pm

You can sell the replacement shares today.

rkhusky
Posts: 5699
Joined: Thu Aug 18, 2011 8:09 pm

Re: I made a wash sale, can I fix it?

Post by rkhusky » Thu Nov 08, 2018 1:16 pm

magicrat wrote:
Thu Nov 08, 2018 1:01 pm
You can sell the replacement shares today.
+1
Sell the shares purchased today and buy something that is not substantially identical (perhaps a Total International fund?). You still will have a wash sale, but the effects may be mitigated if the share price does not change much between today and when you sell.

The number of shares purchased today will cancel an equal number of shares that were sold for a loss. That lost loss will be added to the cost basis of the shares purchased today. So, you will recoup the loss when you sell those shares, but like you say, the shares may go up in price canceling some of the loss that you might have today.

If the number of shares bought today is less than the number of shares sold for a loss, you apply the wash sale first to the shares bought first (Sept 2017) and then work your way forward in time until you have matched up all the shares bought today.

MikeMak27
Posts: 104
Joined: Fri Jul 03, 2015 4:37 am

Re: I made a wash sale, can I fix it?

Post by MikeMak27 » Thu Nov 08, 2018 2:03 pm

rkhusky wrote:
Thu Nov 08, 2018 1:16 pm
magicrat wrote:
Thu Nov 08, 2018 1:01 pm
You can sell the replacement shares today.
+1
Sell the shares purchased today and buy something that is not substantially identical (perhaps a Total International fund?). You still will have a wash sale, but the effects may be mitigated if the share price does not change much between today and when you sell.

The number of shares purchased today will cancel an equal number of shares that were sold for a loss. That lost loss will be added to the cost basis of the shares purchased today. So, you will recoup the loss when you sell those shares, but like you say, the shares may go up in price canceling some of the loss that you might have today.

If the number of shares bought today is less than the number of shares sold for a loss, you apply the wash sale first to the shares bought first (Sept 2017) and then work your way forward in time until you have matched up all the shares bought today.
Ok, so I'm going to sell all of the IEMG shares that I bought today. Then buy a replacement, SCZ (small cap developed international). Then wait till December 10th 2018 before buying anymore IEMG. I will get to claim practically the entire loss (since price hasn't changed much at all). Is that correct?
Mac 4 fund portfolio: 45% US small cap value (IJS, VBR), 40% Emerging Markets (IEMG, VWO, FPMAX), 10% long term US treasuries (TLT), 5% US REITS (VNQ)

MotoTrojan
Posts: 2461
Joined: Wed Feb 01, 2017 8:39 pm

Re: I made a wash sale, can I fix it?

Post by MotoTrojan » Thu Nov 08, 2018 3:05 pm

MikeMak27 wrote:
Thu Nov 08, 2018 2:03 pm
rkhusky wrote:
Thu Nov 08, 2018 1:16 pm
magicrat wrote:
Thu Nov 08, 2018 1:01 pm
You can sell the replacement shares today.
+1
Sell the shares purchased today and buy something that is not substantially identical (perhaps a Total International fund?). You still will have a wash sale, but the effects may be mitigated if the share price does not change much between today and when you sell.

The number of shares purchased today will cancel an equal number of shares that were sold for a loss. That lost loss will be added to the cost basis of the shares purchased today. So, you will recoup the loss when you sell those shares, but like you say, the shares may go up in price canceling some of the loss that you might have today.

If the number of shares bought today is less than the number of shares sold for a loss, you apply the wash sale first to the shares bought first (Sept 2017) and then work your way forward in time until you have matched up all the shares bought today.
Ok, so I'm going to sell all of the IEMG shares that I bought today. Then buy a replacement, SCZ (small cap developed international). Then wait till December 10th 2018 before buying anymore IEMG. I will get to claim practically the entire loss (since price hasn't changed much at all). Is that correct?
Yup. Technically you still had a wash sale so your basis on the newer shares was adjusted up to account for this. Now that you’ve sold your loss will be bigger (higher basis) so you’ll recoup the original full loss. Broker should’ve handled this themselves if all in the same account.

You are selling EM to buy SC developed though. I’d try to find another EM fund which uses a different index, assuming you still intend to hold EM.

MikeMak27
Posts: 104
Joined: Fri Jul 03, 2015 4:37 am

Re: I made a wash sale, can I fix it?

Post by MikeMak27 » Thu Nov 08, 2018 3:12 pm

MotoTrojan wrote:
Thu Nov 08, 2018 3:05 pm
MikeMak27 wrote:
Thu Nov 08, 2018 2:03 pm
rkhusky wrote:
Thu Nov 08, 2018 1:16 pm
magicrat wrote:
Thu Nov 08, 2018 1:01 pm
You can sell the replacement shares today.
+1
Sell the shares purchased today and buy something that is not substantially identical (perhaps a Total International fund?). You still will have a wash sale, but the effects may be mitigated if the share price does not change much between today and when you sell.

The number of shares purchased today will cancel an equal number of shares that were sold for a loss. That lost loss will be added to the cost basis of the shares purchased today. So, you will recoup the loss when you sell those shares, but like you say, the shares may go up in price canceling some of the loss that you might have today.

If the number of shares bought today is less than the number of shares sold for a loss, you apply the wash sale first to the shares bought first (Sept 2017) and then work your way forward in time until you have matched up all the shares bought today.
Ok, so I'm going to sell all of the IEMG shares that I bought today. Then buy a replacement, SCZ (small cap developed international). Then wait till December 10th 2018 before buying anymore IEMG. I will get to claim practically the entire loss (since price hasn't changed much at all). Is that correct?
Yup. Technically you still had a wash sale so your basis on the newer shares was adjusted up to account for this. Now that you’ve sold your loss will be bigger (higher basis) so you’ll recoup the original full loss. Broker should’ve handled this themselves if all in the same account.

You are selling EM to buy SC developed though. I’d try to find another EM fund which uses a different index, assuming you still intend to hold EM.

VWO would work just fine, correct? It's not the same index as IEMG.
Mac 4 fund portfolio: 45% US small cap value (IJS, VBR), 40% Emerging Markets (IEMG, VWO, FPMAX), 10% long term US treasuries (TLT), 5% US REITS (VNQ)

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