Will cap gain and dividend count as wash sale?

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artking99
Posts: 21
Joined: Thu Apr 07, 2016 3:57 pm

Will cap gain and dividend count as wash sale?

Post by artking99 »

If I sell some shares I bought in Oct to tax loss harvest today, will the cap gain and dividend in the next couple weeks count as wash sale? If yes, how can avoid this wash sale situation?
DSInvestor
Posts: 11363
Joined: Sat Oct 04, 2008 11:42 am

Re: Will cap gain and dividend count as wash sale?

Post by DSInvestor »

If you reinvest the capital gains and dividend distributions and acquire new shares of the fund within the wash sale window, you will have a wash sale. Stop reinvestment of those distributions and you should be fine. If you're investing using an automatic transaction to buy monthly, stop that as well.

The wash sale window includes the day of the sale, the 30 days prior to date of sale and the 30 days after the sale.
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Topic Author
artking99
Posts: 21
Joined: Thu Apr 07, 2016 3:57 pm

Re: Will cap gain and dividend count as wash sale?

Post by artking99 »

So I should take the cap gain and dividend as CASH without reinvesting, is this right?

Thx.
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Will cap gain and dividend count as wash sale?

Post by PFInterest »

Yes you shouldn't reinvest.
stan1
Posts: 8911
Joined: Mon Oct 08, 2007 4:35 pm

Re: Will cap gain and dividend count as wash sale?

Post by stan1 »

You can direct the distributions to a money market fund or another holding you haven't tax loss harvested. If you have capital gains distributions on an actively managed fund I would stop all reinvestments into that fund and only buy more tax efficient indexed investments in the future.
rkhusky
Posts: 10192
Joined: Thu Aug 18, 2011 8:09 pm

Re: Will cap gain and dividend count as wash sale?

Post by rkhusky »

stan1 wrote: Fri Nov 23, 2018 11:56 am You can direct the distributions to a money market fund or another holding you haven't tax loss harvested.
If you have one of the new brokerage accounts, you can only direct distributions to the sweep account, which is a MM account.
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