TLH pair for IJS (ishares S&P small cap value)

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yogiph
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TLH pair for IJS (ishares S&P small cap value)

Post by yogiph » Tue Dec 04, 2018 6:54 pm

Looking for some help with recommendations on some etf pairs to tax loss harvest IJS with. Please help.

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Nicolas
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by Nicolas » Tue Dec 04, 2018 7:41 pm

VTWV Vanguard Russell 2000 Value ETF. Different index but it’s still small value and has a 0.2% expense ratio.
One never knows, do one? — Fats Waller

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vineviz
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by vineviz » Tue Dec 04, 2018 7:47 pm

yogiph wrote:
Tue Dec 04, 2018 6:54 pm
Looking for some help with recommendations on some etf pairs to tax loss harvest IJS with. Please help.
SLYV and VIOV would be natural choices.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Nicolas
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by Nicolas » Tue Dec 04, 2018 7:55 pm

vineviz wrote:
Tue Dec 04, 2018 7:47 pm
yogiph wrote:
Tue Dec 04, 2018 6:54 pm
Looking for some help with recommendations on some etf pairs to tax loss harvest IJS with. Please help.
SLYV and VIOV would be natural choices.
But those ETFs track the same index that IJS does, the S&P Small-Cap 600 Value index. Wouldn’t they be considered “substantially similar identical” by the IRS?

Edit: Corrected text to state “substantially identical.”
Last edited by Nicolas on Tue Dec 04, 2018 8:29 pm, edited 1 time in total.
One never knows, do one? — Fats Waller

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vineviz
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by vineviz » Tue Dec 04, 2018 7:58 pm

Nicolas wrote:
Tue Dec 04, 2018 7:55 pm
vineviz wrote:
Tue Dec 04, 2018 7:47 pm
yogiph wrote:
Tue Dec 04, 2018 6:54 pm
Looking for some help with recommendations on some etf pairs to tax loss harvest IJS with. Please help.
SLYV and VIOV would be natural choices.
But those ETFs track the same index that IJS does, the S&P Small-Cap 600 Value index. Wouldn’t they be considered “substantially similar” by the IRS?
They never have, AFAIK, but obviously opinions vary. I personally wouldn’t give it a second thought.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

drk
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by drk » Tue Dec 04, 2018 8:00 pm

Nicolas wrote:
Tue Dec 04, 2018 7:55 pm
But those ETFs track the same index that IJS does, the S&P Small-Cap 600 Value index. Wouldn’t they be considered “substantially similar” by the IRS?
The IRS's phrase is "substantially identical," and the IRS has never indicated that two funds tracking the same index fit that bill. On this board, Earl Lemongrab has gone so far as to use IVV and VOO as TLH partners to demonstrate the point.

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vineviz
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by vineviz » Tue Dec 04, 2018 8:03 pm

drk wrote:
Tue Dec 04, 2018 8:00 pm
Nicolas wrote:
Tue Dec 04, 2018 7:55 pm
But those ETFs track the same index that IJS does, the S&P Small-Cap 600 Value index. Wouldn’t they be considered “substantially similar” by the IRS?
The IRS's phrase is "substantially identical," and the IRS has never indicated that two funds tracking the same index fit that bill. On this board, Earl Lemongrab has gone so far as to use IVV and VOO as TLH partners to demonstrate the point.
Yep.

If you’re worried, VBR and XSLV are two other potential candidates.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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triceratop
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by triceratop » Tue Dec 04, 2018 8:12 pm

vineviz wrote:
Tue Dec 04, 2018 7:58 pm
Nicolas wrote:
Tue Dec 04, 2018 7:55 pm
vineviz wrote:
Tue Dec 04, 2018 7:47 pm
yogiph wrote:
Tue Dec 04, 2018 6:54 pm
Looking for some help with recommendations on some etf pairs to tax loss harvest IJS with. Please help.
SLYV and VIOV would be natural choices.
But those ETFs track the same index that IJS does, the S&P Small-Cap 600 Value index. Wouldn’t they be considered “substantially similar” by the IRS?
They never have, AFAIK, but obviously opinions vary. I personally wouldn’t give it a second thought.
While it's accurate to say "they never have", it's also the case that the IRS has never really clarified what that rule means, so it's not like SLYV <--- IJS is necessarily as safe as VBR <--- IJS.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

Culbretd
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by Culbretd » Tue Dec 04, 2018 8:20 pm

Vbr vanguard small cap value tracks the crsp index

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Nicolas
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by Nicolas » Tue Dec 04, 2018 8:31 pm

drk wrote:
Tue Dec 04, 2018 8:00 pm
Nicolas wrote:
Tue Dec 04, 2018 7:55 pm
But those ETFs track the same index that IJS does, the S&P Small-Cap 600 Value index. Wouldn’t they be considered “substantially similar” by the IRS?
The IRS's phrase is "substantially identical," and the IRS has never indicated that two funds tracking the same index fit that bill. On this board, Earl Lemongrab has gone so far as to use IVV and VOO as TLH partners to demonstrate the point.
I’d be worried if my return came up for audit.
One never knows, do one? — Fats Waller

dcabler
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by dcabler » Wed Dec 05, 2018 6:54 am

yogiph wrote:
Tue Dec 04, 2018 6:54 pm
Looking for some help with recommendations on some etf pairs to tax loss harvest IJS with. Please help.
IJS and IJJ make a nice pair. SCV vs. MCV.

stan1
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by stan1 » Wed Dec 05, 2018 9:28 am

dcabler wrote:
Wed Dec 05, 2018 6:54 am
yogiph wrote:
Tue Dec 04, 2018 6:54 pm
Looking for some help with recommendations on some etf pairs to tax loss harvest IJS with. Please help.
IJS and IJJ make a nice pair. SCV vs. MCV.
If you make a deliberate decision to include small cap value in your asset allocation I would not use a mid cap value fund as a TLH pair. I personally would TLH between VIOV and IJS at this point. The IRS has had 40 years to tell us S&P Index 500 funds are substantially identical and they have not done so. Multiple funds using the same index is nothing new at this point.

I bought most of my IJS in 2008 and I sure hope I never have to tax loss harvest it. I donated 200 shares of IJS to my DAF at the end of 2017 and I bought 200 more shares of IJS in 2018 -- but have not tax loss harvested it yet. I will buy VIOV if I do. I strongly prefer the S&P 600 Value index because it has size, value, and quality screens and at this point would not put more money into a CRSP or Russell small cap value index.

dcabler
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by dcabler » Wed Dec 05, 2018 10:55 am

stan1 wrote:
Wed Dec 05, 2018 9:28 am
dcabler wrote:
Wed Dec 05, 2018 6:54 am
yogiph wrote:
Tue Dec 04, 2018 6:54 pm
Looking for some help with recommendations on some etf pairs to tax loss harvest IJS with. Please help.
IJS and IJJ make a nice pair. SCV vs. MCV.
If you make a deliberate decision to include small cap value in your asset allocation I would not use a mid cap value fund as a TLH pair. I personally would TLH between VIOV and IJS at this point. The IRS has had 40 years to tell us S&P Index 500 funds are substantially identical and they have not done so. Multiple funds using the same index is nothing new at this point.

I bought most of my IJS in 2008 and I sure hope I never have to tax loss harvest it. I donated 200 shares of IJS to my DAF at the end of 2017 and I bought 200 more shares of IJS in 2018 -- but have not tax loss harvested it yet. I will buy VIOV if I do. I strongly prefer the S&P 600 Value index because it has size, value, and quality screens and at this point would not put more money into a CRSP or Russell small cap value index.
I made a deliberate decision to include both, and I slosh back and forth between the two for TLH. Siamond did a very good analysis of MCV and SCV a while back and you can look at the relative, historic performance of these two - in my case the difference isn't enough to matter much given my overall AA, at least for purposes of holding one or the other long enough to avoid a wash sale.....

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ruralavalon
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by ruralavalon » Wed Dec 05, 2018 12:23 pm

vineviz wrote:
Tue Dec 04, 2018 7:58 pm
Nicolas wrote:
Tue Dec 04, 2018 7:55 pm
vineviz wrote:
Tue Dec 04, 2018 7:47 pm
yogiph wrote:
Tue Dec 04, 2018 6:54 pm
Looking for some help with recommendations on some etf pairs to tax loss harvest IJS with. Please help.
SLYV and VIOV would be natural choices.
But those ETFs track the same index that IJS does, the S&P Small-Cap 600 Value index. Wouldn’t they be considered “substantially similar” by the IRS?
They never have, AFAIK, but obviously opinions vary. I personally wouldn’t give it a second thought.
The term is "substantially identical", which the IRS has not defined further.

I cannot imagine how funds could more more "identical" than by following the identical index.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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vineviz
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by vineviz » Wed Dec 05, 2018 1:18 pm

ruralavalon wrote:
Wed Dec 05, 2018 12:23 pm
The term is "substantially identical", which the IRS has not defined further.

I cannot imagine how funds could more more "identical" than by following the identical index.
Both the IRS and the legal/compliance teams at every brokerage firm have had decades of opportunity to arrive at the same conclusion and, so far, they have not.

I know that different investors have different degrees of risk aversion on this topic, but I cannot imagine that in 50 million audits that such a TLH pair hasn't come up at least once.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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triceratop
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by triceratop » Wed Dec 05, 2018 1:27 pm

vineviz wrote:
Wed Dec 05, 2018 1:18 pm
ruralavalon wrote:
Wed Dec 05, 2018 12:23 pm
The term is "substantially identical", which the IRS has not defined further.

I cannot imagine how funds could more more "identical" than by following the identical index.
Both the IRS and the legal/compliance teams at every brokerage firm have had decades of opportunity to arrive at the same conclusion and, so far, they have not.

I know that different investors have different degrees of risk aversion on this topic, but I cannot imagine that in 50 million audits that such a TLH pair hasn't come up at least once.
Let's suppose you're right about a TLH pair coming up in an audit (I bet you are). Are you suggesting that declining to take any action on a TLH pair that arises in an audit is endorsement?
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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vineviz
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by vineviz » Wed Dec 05, 2018 1:39 pm

triceratop wrote:
Wed Dec 05, 2018 1:27 pm
vineviz wrote:
Wed Dec 05, 2018 1:18 pm
ruralavalon wrote:
Wed Dec 05, 2018 12:23 pm
The term is "substantially identical", which the IRS has not defined further.

I cannot imagine how funds could more more "identical" than by following the identical index.
Both the IRS and the legal/compliance teams at every brokerage firm have had decades of opportunity to arrive at the same conclusion and, so far, they have not.

I know that different investors have different degrees of risk aversion on this topic, but I cannot imagine that in 50 million audits that such a TLH pair hasn't come up at least once.
Let's suppose you're right about a TLH pair coming up in an audit (I bet you are). Are you suggesting that declining to take any action on a TLH pair that arises in an audit is endorsement?
An explicit endorsement? Of course not. An implicit endorsement? Perhaps. A strong indication that this isn't among the top 100 things the average investor needs to worry about? Definitely.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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triceratop
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by triceratop » Wed Dec 05, 2018 1:59 pm

vineviz wrote:
Wed Dec 05, 2018 1:39 pm
triceratop wrote:
Wed Dec 05, 2018 1:27 pm
vineviz wrote:
Wed Dec 05, 2018 1:18 pm
ruralavalon wrote:
Wed Dec 05, 2018 12:23 pm
The term is "substantially identical", which the IRS has not defined further.

I cannot imagine how funds could more more "identical" than by following the identical index.
Both the IRS and the legal/compliance teams at every brokerage firm have had decades of opportunity to arrive at the same conclusion and, so far, they have not.

I know that different investors have different degrees of risk aversion on this topic, but I cannot imagine that in 50 million audits that such a TLH pair hasn't come up at least once.
Let's suppose you're right about a TLH pair coming up in an audit (I bet you are). Are you suggesting that declining to take any action on a TLH pair that arises in an audit is endorsement?
An explicit endorsement? Of course not. An implicit endorsement? Perhaps. A strong indication that this isn't among the top 100 things the average investor needs to worry about? Definitely.
I'd say it suggests instead it isn't on the IRS's top 100 things they're worried about when doing an audit of someone. But the average investor fits a rather different profile than the typical things profiled for in an IRS audit, don't you think?
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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vineviz
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by vineviz » Wed Dec 05, 2018 2:25 pm

triceratop wrote:
Wed Dec 05, 2018 1:59 pm
vineviz wrote:
Wed Dec 05, 2018 1:39 pm
triceratop wrote:
Wed Dec 05, 2018 1:27 pm
vineviz wrote:
Wed Dec 05, 2018 1:18 pm
ruralavalon wrote:
Wed Dec 05, 2018 12:23 pm
The term is "substantially identical", which the IRS has not defined further.

I cannot imagine how funds could more more "identical" than by following the identical index.
Both the IRS and the legal/compliance teams at every brokerage firm have had decades of opportunity to arrive at the same conclusion and, so far, they have not.

I know that different investors have different degrees of risk aversion on this topic, but I cannot imagine that in 50 million audits that such a TLH pair hasn't come up at least once.
Let's suppose you're right about a TLH pair coming up in an audit (I bet you are). Are you suggesting that declining to take any action on a TLH pair that arises in an audit is endorsement?
An explicit endorsement? Of course not. An implicit endorsement? Perhaps. A strong indication that this isn't among the top 100 things the average investor needs to worry about? Definitely.
I'd say it suggests instead it isn't on the IRS's top 100 things they're worried about when doing an audit of someone.
Either way, if I’m going to make up things to worry about it’s not going to be worrying that my audit is the one that breaks 40 years of precedence.

YMMV, but I’ve seen no evidence that anyone at the IRS cares about this anywhere near as much as people in this forum do.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Earl Lemongrab
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by Earl Lemongrab » Thu Dec 06, 2018 1:17 am

triceratop wrote:
Tue Dec 04, 2018 8:12 pm
While it's accurate to say "they never have", it's also the case that the IRS has never really clarified what that rule means, so it's not like SLYV <--- IJS is necessarily as safe as VBR <--- IJS.
Exactly. People have "decided" on the forum that different index == not substantially identical. There is absolutely no IRS ruling or publication that supports this.

No one knows. It's all opinion except for identical CUSIPs. There's an extremely high likelihood that share classes of a fund, like Vanguard Admiral and ETFs would be SI, as Vanguard can offer tax-free conversions between classes.

At one time, there was an IRS publication that stated that usually funds from different companies are not SI. The pub is obsolete, but is that philosophy? I think it's still operable, others don't. I swapped VOO for IVV, not to "prove" anything, because it doesn't, but to demonstrate my faith in my opinion.

You can't get a definitive answer from anyone on the forum, because they aren't able to offer it. You can't prove a negative. Unless the IRS produces more guidance or some rulings turn up, all anyone can do is read the law and the IRS interpretation of that.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Earl Lemongrab
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by Earl Lemongrab » Thu Dec 06, 2018 1:26 am

ruralavalon wrote:
Wed Dec 05, 2018 12:23 pm
I cannot imagine how funds could more more "identical" than by following the identical index.
They could be share classes of the same fund, like VTI and VTSAX. Those are not identical by any stretch, as one is an ETF and the other a traditional mutual fund, but I think likely that they are substantially identical.

The IRS has never stated that index has anything to do with it. In the past they did say that funds issued by different companies are not substantially identical. Funds following the same index can have other differences.

Some people believe that if two funds follow a large percentage of the same market then they are SI. These people are not necessarily wrong. Nor or they necessarily right.

It does amaze me that people spend so much angst on such an unlikely and low-impact event. You're not going to prison for a wash sale.

My example I use is that every year, people are injured and killed by debris that flies through windshields on the highways. Every year. Maimed and dead. Who has done anything to avoid that? Drive the surface roads? Buy armored windshields? That's a real actual danger that happens to people.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Earl Lemongrab
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Re: TLH pair for IJS (ishares S&P small cap value)

Post by Earl Lemongrab » Thu Dec 06, 2018 1:33 am

vineviz wrote:
Wed Dec 05, 2018 2:25 pm
Either way, if I’m going to make up things to worry about it’s not going to be worrying that my audit is the one that breaks 40 years of precedence.
I'd be pleased as can be if I did get flagged! Besides providing useful information to the nation, I'd be a minor celebrity here. And it would have little affect on my life as it would just require a new Sched D to adjust carryover losses.
YMMV, but I’ve seen no evidence that anyone at the IRS cares about this anywhere near as much as people in this forum do.
It's not much of a money-maker. Especially not compared to millions flying out the door in fraudulent returns. The IRS instituted covered shares to get the lowest-hanging fruit, same funds in the same accounts, and seem happy with that.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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