Wash sale rule question

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harp29
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Joined: Sun Feb 20, 2011 9:27 pm

Wash sale rule question

Post by harp29 » Sun Mar 22, 2020 1:06 pm

I'm a bit confused about 30 day before and after provision with the wash sale rule.

Please help me with my example:

Say I buy VOO Jan 2, Jan 7, Jan 14, Jan 21. Then on Jan 22 I sell VOO for a loss and buy something totally different, like a bond fund.

Does the wash sale rule come into play at all here since I purchased within 30 days BEFORE I sold for a loss?

Thanks

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iceport
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Re: Wash sale rule question

Post by iceport » Sun Mar 22, 2020 1:14 pm

harp29 wrote:
Sun Mar 22, 2020 1:06 pm
I'm a bit confused about 30 day before and after provision with the wash sale rule.

Please help me with my example:

Say I buy VOO Jan 2, Jan 7, Jan 14, Jan 21. Then on Jan 22 I sell VOO for a loss and buy something totally different, like a bond fund.

Does the wash sale rule come into play at all here since I purchased within 30 days BEFORE I sold for a loss?

Thanks
Not if you sell all that you bought.

See here: https://fairmark.com/investment-taxatio ... ent-stock/

It doesn't matter that these were multiple purchases. What matters is that they were all sold simultaneously with the same sell order.

Note that brokers needed to develop their own computer algorithms for reporting wash sales. It is possible that their programs would flag the transaction as a wash sale. However, it would be an irrelevant wash sale, because the value of the loss would be added to the cost basis of any theoretical wash shares, and you will realize the full value of the loss when the sale of the theoretical wash shares is accounted for.
"Discipline matters more than allocation.” ─William Bernstein

Topic Author
harp29
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Joined: Sun Feb 20, 2011 9:27 pm

Re: Wash sale rule question

Post by harp29 » Sun Mar 22, 2020 1:20 pm

What if I sold all that I bought in VOO in the last 30 days, BUT I had shares in VOO that I purchased a long time ago---like in 2010 that I do not sell?

Would this matter to trigger the wash sale rule?

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iceport
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Re: Wash sale rule question

Post by iceport » Sun Mar 22, 2020 1:24 pm

harp29 wrote:
Sun Mar 22, 2020 1:20 pm
What if I sold all that I bought in VOO in the last 30 days, BUT I had shares in VOO that I purchased a long time ago---like in 2010 that I do not sell?

Would this matter to trigger the wash sale rule?
No. Only shares purchased within the 61-day wash sale period can be potential replacement shares subject to the wash sale rule. (There is an example in the link that addresses this circumstance, right?)
"Discipline matters more than allocation.” ─William Bernstein

UpperNwGuy
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Re: Wash sale rule question

Post by UpperNwGuy » Sun Mar 22, 2020 2:26 pm

Let me see if I understand this correctly. If you sell all shares that you purchased in the last 31 days, and don't buy more in the next 30 days, then there is no wash sale even if, for example, a dividend was reinvested a few days earlier?

I am asking because I am thinking of doing a TLH from VTSAX to the 500 Index Fund and Extended Market Fund as soon as my VTSAX dividends reinvest in the next day or two. I would liquidate my entire VTSAX position.

Longdog
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Location: Philadelphia

Re: Wash sale rule question

Post by Longdog » Sun Mar 22, 2020 2:39 pm

UpperNwGuy wrote:
Sun Mar 22, 2020 2:26 pm
Let me see if I understand this correctly. If you sell all shares that you purchased in the last 31 days, and don't buy more in the next 30 days, then there is no wash sale even if, for example, a dividend was reinvested a few days earlier?

I am asking because I am thinking of doing a TLH from VTSAX to the 500 Index Fund and Extended Market Fund as soon as my VTSAX dividends reinvest in the next day or two. I would liquidate my entire VTSAX position.
A dividend reinvestment counts as a purchase. So, either sell the shares purchased by the dividend or turn off dividend reinvestments.
Steve

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Silly Wabbit
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Re: Wash sale rule question

Post by Silly Wabbit » Sun Mar 22, 2020 2:41 pm

UpperNwGuy wrote:
Sun Mar 22, 2020 2:26 pm
Let me see if I understand this correctly. If you sell all shares that you purchased in the last 31 days, and don't buy more in the next 30 days, then there is no wash sale even if, for example, a dividend was reinvested a few days ago?

I am asking because I am thinking of doing a TLH from VTSAX to the 500 Index Fund and Extended Market Fund as soon as my VTSAX dividends reinvest in the next day or two. I would liquidate my entire VTSAX position.
I'm looking to do the same.

Are you looking at the reinvest/ex date or payable date?
https://investornews.vanguard/upcoming- ... formation/

Will you do the exchange on 26th or 27th?

UpperNwGuy
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Re: Wash sale rule question

Post by UpperNwGuy » Sun Mar 22, 2020 2:55 pm

Longdog wrote:
Sun Mar 22, 2020 2:39 pm
UpperNwGuy wrote:
Sun Mar 22, 2020 2:26 pm
Let me see if I understand this correctly. If you sell all shares that you purchased in the last 31 days, and don't buy more in the next 30 days, then there is no wash sale even if, for example, a dividend was reinvested a few days earlier?

I am asking because I am thinking of doing a TLH from VTSAX to the 500 Index Fund and Extended Market Fund as soon as my VTSAX dividends reinvest in the next day or two. I would liquidate my entire VTSAX position.
A dividend reinvestment counts as a purchase. So, either sell the shares purchased by the dividend or turn off dividend reinvestments.
Ok, I did some more research and discovered that the dividend won't be declared until Tue Mar 24. If I submit my transaction to exchange funds on Mon Mar 23 will I miss the dividend altogether? I'm hoping that would be possible.

UpperNwGuy
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Re: Wash sale rule question

Post by UpperNwGuy » Sun Mar 22, 2020 2:58 pm

Silly Wabbit wrote:
Sun Mar 22, 2020 2:41 pm
UpperNwGuy wrote:
Sun Mar 22, 2020 2:26 pm
Let me see if I understand this correctly. If you sell all shares that you purchased in the last 31 days, and don't buy more in the next 30 days, then there is no wash sale even if, for example, a dividend was reinvested a few days ago?

I am asking because I am thinking of doing a TLH from VTSAX to the 500 Index Fund and Extended Market Fund as soon as my VTSAX dividends reinvest in the next day or two. I would liquidate my entire VTSAX position.
I'm looking to do the same.

Are you looking at the reinvest/ex date or payable date?
https://investornews.vanguard/upcoming- ... formation/

Will you do the exchange on 26th or 27th?
I'm now thinking of the 23rd, before the dividend is declared. If that's not possible, I'll wait until the 26th after the reinvestment is complete.

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nps
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Re: Wash sale rule question

Post by nps » Sun Mar 22, 2020 3:02 pm

UpperNwGuy wrote:
Sun Mar 22, 2020 2:58 pm
Silly Wabbit wrote:
Sun Mar 22, 2020 2:41 pm
UpperNwGuy wrote:
Sun Mar 22, 2020 2:26 pm
Let me see if I understand this correctly. If you sell all shares that you purchased in the last 31 days, and don't buy more in the next 30 days, then there is no wash sale even if, for example, a dividend was reinvested a few days ago?

I am asking because I am thinking of doing a TLH from VTSAX to the 500 Index Fund and Extended Market Fund as soon as my VTSAX dividends reinvest in the next day or two. I would liquidate my entire VTSAX position.
I'm looking to do the same.

Are you looking at the reinvest/ex date or payable date?
https://investornews.vanguard/upcoming- ... formation/

Will you do the exchange on 26th or 27th?
I'm now thinking of the 23rd, before the dividend is declared. If that's not possible, I'll wait until the 26th after the reinvestment is complete.
Easy enough to turn off automatic reinvestment if you're worried about it

travellight
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Location: San Diego

Re: Wash sale rule question

Post by travellight » Sun Mar 22, 2020 3:16 pm

What if you held the stock or ETF in two different banks? Do you have to sell all of it at the same time in all accounts or can you still tax loss harvest if you sell on different days but ultimately liquidate and sell all holdings of that particular stock or ETF, even if you had bought some recently within the prior 30 days?
364

UpperNwGuy
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Joined: Sun Oct 08, 2017 7:16 pm

Re: Wash sale rule question

Post by UpperNwGuy » Sun Mar 22, 2020 3:21 pm

nps wrote:
Sun Mar 22, 2020 3:02 pm
UpperNwGuy wrote:
Sun Mar 22, 2020 2:58 pm
Silly Wabbit wrote:
Sun Mar 22, 2020 2:41 pm
UpperNwGuy wrote:
Sun Mar 22, 2020 2:26 pm
Let me see if I understand this correctly. If you sell all shares that you purchased in the last 31 days, and don't buy more in the next 30 days, then there is no wash sale even if, for example, a dividend was reinvested a few days ago?

I am asking because I am thinking of doing a TLH from VTSAX to the 500 Index Fund and Extended Market Fund as soon as my VTSAX dividends reinvest in the next day or two. I would liquidate my entire VTSAX position.
I'm looking to do the same.

Are you looking at the reinvest/ex date or payable date?
https://investornews.vanguard/upcoming- ... formation/

Will you do the exchange on 26th or 27th?
I'm now thinking of the 23rd, before the dividend is declared. If that's not possible, I'll wait until the 26th after the reinvestment is complete.
Easy enough to turn off automatic reinvestment if you're worried about it
Good idea. I will do that now.

If I sell the fund the day before the dividend is declared, will I get a dividend, or will I miss it? (I want to miss it.)

User avatar
Silly Wabbit
Posts: 133
Joined: Sat Mar 25, 2017 9:54 pm

Re: Wash sale rule question

Post by Silly Wabbit » Sun Mar 22, 2020 3:34 pm

UpperNwGuy wrote:
Sun Mar 22, 2020 3:21 pm
nps wrote:
Sun Mar 22, 2020 3:02 pm
UpperNwGuy wrote:
Sun Mar 22, 2020 2:58 pm
Silly Wabbit wrote:
Sun Mar 22, 2020 2:41 pm
UpperNwGuy wrote:
Sun Mar 22, 2020 2:26 pm
Let me see if I understand this correctly. If you sell all shares that you purchased in the last 31 days, and don't buy more in the next 30 days, then there is no wash sale even if, for example, a dividend was reinvested a few days ago?

I am asking because I am thinking of doing a TLH from VTSAX to the 500 Index Fund and Extended Market Fund as soon as my VTSAX dividends reinvest in the next day or two. I would liquidate my entire VTSAX position.
I'm looking to do the same.

Are you looking at the reinvest/ex date or payable date?
https://investornews.vanguard/upcoming- ... formation/

Will you do the exchange on 26th or 27th?
I'm now thinking of the 23rd, before the dividend is declared. If that's not possible, I'll wait until the 26th after the reinvestment is complete.
Easy enough to turn off automatic reinvestment if you're worried about it
Good idea. I will do that now.

If I sell the fund the day before the dividend is declared, will I get a dividend, or will I miss it? (I want to miss it.)
The SP 500 fund's dividends are done for the quarter. Total market and extended market issue dividends on the same dates.

Both have a record date of the 24th. Seems like we'd dodge some dividends, and taxes, by exchanging before then.

On Monday the 23rd, I need to exchange out of total market and total international in a Roth IRA to avoid wash sales.

I wonder if I'd dodge dividends if I initiated the exchange in my taxable the following day, the 24th? I assume dividends are recorded at end-of-day

UpperNwGuy
Posts: 3653
Joined: Sun Oct 08, 2017 7:16 pm

Re: Wash sale rule question

Post by UpperNwGuy » Sun Mar 22, 2020 3:41 pm

Silly Wabbit wrote:
Sun Mar 22, 2020 3:34 pm
The SP 500 fund's dividends are done for the quarter. Total market and extended market issue dividends on the same dates.

Both have a record date of the 24th. Seems like we'd dodge some dividends, and taxes, by exchanging before then.

On Monday the 23rd, I need to exchange out of total market and total international in a Roth IRA to avoid wash sales.

I wonder if I'd dodge dividends if I initiated the exchange in my taxable the following day, the 24th? I assume dividends are recorded at end-of-day
I have that question, too.

The other mystery is: what will the market do on the 23rd and 24th?

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Silly Wabbit
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Re: Wash sale rule question

Post by Silly Wabbit » Sun Mar 22, 2020 3:48 pm

UpperNwGuy wrote:
Sun Mar 22, 2020 3:41 pm
Silly Wabbit wrote:
Sun Mar 22, 2020 3:34 pm
The SP 500 fund's dividends are done for the quarter. Total market and extended market issue dividends on the same dates.

Both have a record date of the 24th. Seems like we'd dodge some dividends, and taxes, by exchanging before then.

On Monday the 23rd, I need to exchange out of total market and total international in a Roth IRA to avoid wash sales.

I wonder if I'd dodge dividends if I initiated the exchange in my taxable the following day, the 24th? I assume dividends are recorded at end-of-day
I have that question, too.

The other mystery is: what will the market do on the 23rd and 24th?
I'll try to do some research. Let me know if you learn anything.

Regarding the other mystery, I don't think it'll influence the plan much. The losses are deep enough that it'll be worthwhile no matter how the market swings early in the week.

Doing it as an exchange ensures we don't miss out on any swing up (or down). That seems important given the recent volatility.

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Silly Wabbit
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Re: Wash sale rule question

Post by Silly Wabbit » Sun Mar 22, 2020 4:48 pm

UpperNwGuy wrote:
Sun Mar 22, 2020 3:41 pm
Silly Wabbit wrote:
Sun Mar 22, 2020 3:34 pm
The SP 500 fund's dividends are done for the quarter. Total market and extended market issue dividends on the same dates.

Both have a record date of the 24th. Seems like we'd dodge some dividends, and taxes, by exchanging before then.

On Monday the 23rd, I need to exchange out of total market and total international in a Roth IRA to avoid wash sales.

I wonder if I'd dodge dividends if I initiated the exchange in my taxable the following day, the 24th? I assume dividends are recorded at end-of-day
I have that question, too.

The other mystery is: what will the market do on the 23rd and 24th?
viewtopic.php?t=309061

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Silly Wabbit
Posts: 133
Joined: Sat Mar 25, 2017 9:54 pm

Re: Wash sale rule question

Post by Silly Wabbit » Sun Mar 22, 2020 9:41 pm

UpperNwGuy wrote:
Sun Mar 22, 2020 3:41 pm
Silly Wabbit wrote:
Sun Mar 22, 2020 3:34 pm
The SP 500 fund's dividends are done for the quarter. Total market and extended market issue dividends on the same dates.

Both have a record date of the 24th. Seems like we'd dodge some dividends, and taxes, by exchanging before then.

On Monday the 23rd, I need to exchange out of total market and total international in a Roth IRA to avoid wash sales.

I wonder if I'd dodge dividends if I initiated the exchange in my taxable the following day, the 24th? I assume dividends are recorded at end-of-day
I have that question, too.

The other mystery is: what will the market do on the 23rd and 24th?
Looks like selling on or before the record date will avoid the dividend. Likewise, buying on or before the record date will receive the dividend.

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