TLH specific question - yup one more

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curious george
Posts: 72
Joined: Sat Jul 27, 2013 11:24 pm

TLH specific question - yup one more

Post by curious george » Thu Mar 12, 2020 5:51 pm

So i took advantage of the drop in the market to "exchange" total US stock market into the S and P 500 fund.
The market has dropped some more. I previously had small a position in the S and P 500 fund that i never sold b/c of cap gains.
now i am considering selling completely out of the S and P 500 position (exchanging into another fund) to capture more losses but i just purchased additional shares on MARch 11th.
S and P 500 fund original shares more than 1 year ago and more shares purchased on March 11th
can i sell ALL of those shares - close the position and take the loss and move into another fund or do i have to wait for 31 days ?
i could only find references about not buying similar or identical funds in the preceding 30 days but nothing about closing out the position.
any references or help please

thanks

marky2kk
Posts: 37
Joined: Tue Feb 11, 2020 10:53 am

Re: TLH specific question - yup one more

Post by marky2kk » Thu Mar 12, 2020 5:56 pm

I have a similar question. I bought VWO a year ago and then again 2 weeks again for a small rebalance.

Now I am just considering selling it all and buy EEM. Would I run into any wash sale problems?

lakpr
Posts: 5380
Joined: Fri Mar 18, 2011 9:59 am

Re: TLH specific question - yup one more

Post by lakpr » Thu Mar 12, 2020 5:57 pm

as long as you will not purchase either total stock market index or S&P 500 index until April 11th, you are good to exit out of the position and buy another fund. If you run out of that too, you can buy the total stock market index from another provider (if you are at a brokerage firm)

Same answer for @marky2kk as well

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iceport
Posts: 4655
Joined: Sat Apr 07, 2007 4:29 pm

Re: TLH specific question - yup one more

Post by iceport » Thu Mar 12, 2020 5:58 pm

curious george wrote:
Thu Mar 12, 2020 5:51 pm
So i took advantage of the drop in the market to "exchange" total US stock market into the S and P 500 fund.
The market has dropped some more. I previously had small a position in the S and P 500 fund that i never sold b/c of cap gains.
now i am considering selling completely out of the S and P 500 position (exchanging into another fund) to capture more losses but i just purchased additional shares on MARch 11th.
S and P 500 fund original shares more than 1 year ago and more shares purchased on March 11th
can i sell ALL of those shares - close the position and take the loss and move into another fund or do i have to wait for 31 days ?
i could only find references about not buying similar or identical funds in the preceding 30 days but nothing about closing out the position.
any references or help please

thanks
Does this article, written by a tax attorney, provide the answer you need?

https://fairmark.com/investment-taxatio ... ent-stock/
"Discipline matters more than allocation.” ─William Bernstein

stan1
Posts: 8528
Joined: Mon Oct 08, 2007 4:35 pm

Re: TLH specific question - yup one more

Post by stan1 » Thu Mar 12, 2020 6:04 pm

marky2kk wrote:
Thu Mar 12, 2020 5:56 pm
I have a similar question. I bought VWO a year ago and then again 2 weeks again for a small rebalance.

Now I am just considering selling it all and buy EEM. Would I run into any wash sale problems?
Look at the EEM expense ratio. Why would you want to buy it?

Then look at IEMG and SCHE. They are better choices.

mocorroco
Posts: 3
Joined: Wed Sep 11, 2019 2:45 pm

Re: TLH specific question - yup one more

Post by mocorroco » Thu Mar 12, 2020 6:04 pm

I am having the same problem understanding the wash sale rule.

The White Coat Investor has this post: https://www.whitecoatinvestor.com/tax-l ... -vanguard/
where he did a back-to-back TLH:

First, he exchanged VTIAX for VFWAX and harvested some losses.
A few days later (less than 30 days), he exchanged VFWAX (all of it) for 80% Developed Marked Index and 20% Emerging market index.

Someone in the comments asked him if what he did wasn't a wash sale since he bought the same shares within the 30-day window to which he responded:

"No, because the shares that were bought were then sold"

I was not really satisfied with that answer so I am hoping for a better one.

TropikThunder
Posts: 2344
Joined: Sun Apr 03, 2016 5:41 pm

Re: TLH specific question - yup one more

Post by TropikThunder » Thu Mar 12, 2020 6:05 pm

curious george wrote:
Thu Mar 12, 2020 5:51 pm
S and P 500 fund original shares more than 1 year ago and more shares purchased on March 11th
marky2kk wrote:
Thu Mar 12, 2020 5:56 pm
I have a similar question. I bought VWO a year ago and then again 2 weeks again for a small rebalance.
+1 to lakpr's answer. The problem arises when you buy and/or sell substantially identical shares within +/- 30 days of the sale that took the loss and keep them (my emphasis added). If you sell the entire position (new and old) and don't buy more within 30 days, then there is no wash sale.

TropikThunder
Posts: 2344
Joined: Sun Apr 03, 2016 5:41 pm

Re: TLH specific question - yup one more

Post by TropikThunder » Thu Mar 12, 2020 6:07 pm

mocorroco wrote:
Thu Mar 12, 2020 6:04 pm
"No, because the shares that were bought were then sold"

I was not really satisfied with that answer so I am hoping for a better one.
That is the correct answer though. You create a wash sale when you sell to take a loss but still hold shares in that fund that were bought within +/- 30 days (so-called "replacement shares"). No replacement shares = no wash sale.

marky2kk
Posts: 37
Joined: Tue Feb 11, 2020 10:53 am

Re: TLH specific question - yup one more

Post by marky2kk » Thu Mar 12, 2020 6:10 pm

stan1 wrote:
Thu Mar 12, 2020 6:04 pm
marky2kk wrote:
Thu Mar 12, 2020 5:56 pm
I have a similar question. I bought VWO a year ago and then again 2 weeks again for a small rebalance.

Now I am just considering selling it all and buy EEM. Would I run into any wash sale problems?
Look at the EEM expense ratio. Why would you want to buy it?

Then look at IEMG and SCHE. They are better choices.
Makes sense. Thanks for the tip. I guess after 31 days I probably switch back to VWO anyways as long as IEMG has not accumulated massive gains.

mocorroco
Posts: 3
Joined: Wed Sep 11, 2019 2:45 pm

Re: TLH specific question - yup one more

Post by mocorroco » Thu Mar 12, 2020 6:24 pm

TropikThunder wrote:
Thu Mar 12, 2020 6:07 pm
mocorroco wrote:
Thu Mar 12, 2020 6:04 pm
"No, because the shares that were bought were then sold"

I was not really satisfied with that answer so I am hoping for a better one.
That is the correct answer though. You create a wash sale when you sell to take a loss but still hold shares in that fund that were bought within +/- 30 days (so-called "replacement shares"). No replacement shares = no wash sale.
I like this explanation much better. Thanks

marky2kk
Posts: 37
Joined: Tue Feb 11, 2020 10:53 am

Re: TLH specific question - yup one more

Post by marky2kk » Thu Mar 12, 2020 6:38 pm

Sorry for derailing @OP. More questions:

1) Suppose in my case I do exchange all of my VWO for IEMG. 31 days later IEMG is in the minus. Then I can just sell all of IEMG and buy back VWO and realize another loss?

2) For my European stocks, selling all of VGK and swap for IEUR wouldn't be considered a wash sale most likely as they are 'fundamentally different'?

lakpr
Posts: 5380
Joined: Fri Mar 18, 2011 9:59 am

Re: TLH specific question - yup one more

Post by lakpr » Thu Mar 12, 2020 7:27 pm

marky2kk wrote:
Thu Mar 12, 2020 6:38 pm
Sorry for derailing @OP. More questions:

1) Suppose in my case I do exchange all of my VWO for IEMG. 31 days later IEMG is in the minus. Then I can just sell all of IEMG and buy back VWO and realize another loss?

2) For my European stocks, selling all of VGK and swap for IEUR wouldn't be considered a wash sale most likely as they are 'fundamentally different'?
Yes (emphasis on "sell all") and Yes (because "fundamentally different").

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