Tax loss harvesting question

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Stch
Posts: 10
Joined: Wed Dec 23, 2020 10:45 am

Tax loss harvesting question

Post by Stch »

I had some shares of VTI at Merrill Edge that had unrealized losses, so I decided to try tax loss harvesting, as recommended by so many on here. So far I have the following transactions:

5/23 Sell 528 shares of VTI
5/23 Buy 296 shares of VOO
6/17 Sell 0.1577 shares of VTI

My original plan was to sell VOO and move back into VTI on 6/24. But then I realized it took a really long time, until 6/17, for the remaining fractional share of VTI to sell. So what effect does this have? Am I OK to still sell on 6/24 or should I wait until 30 days after the fractional share sale? Would it just be a wash sale for a single share?
User avatar
arcticpineapplecorp.
Posts: 10584
Joined: Tue Mar 06, 2012 9:22 pm

Re: Tax loss harvesting question

Post by arcticpineapplecorp. »

Stch wrote: Wed Jun 22, 2022 6:57 pm I had some shares of VTI at Merrill Edge that had unrealized losses, so I decided to try tax loss harvesting, as recommended by so many on here. So far I have the following transactions:

5/23 Sell 528 shares of VTI
5/23 Buy 296 shares of VOO
6/17 Sell 0.1577 shares of VTI

My original plan was to sell VOO and move back into VTI on 6/24. But then I realized it took a really long time, until 6/17, for the remaining fractional share of VTI to sell. So what effect does this have? Am I OK to still sell on 6/24 or should I wait until 30 days after the fractional share sale? Would it just be a wash sale for a single share?
you don't have to sell and buy back what you sold 31 days before. You can just hold VOO instead since you should have a replacement (VOO) that you believe is suitable for the shares sold (VTI). Of course you can buy back into VTI, but you also could be looking at gains on VOO sold (if they went up over the 31 days held) to buy back VTI. So you have to assess whether you want to sell something (VOO) to buy back VTI if doing so might incur tax gains from VOO sold.

If you buy back VTI on 6/24/2022 you will create a wash sale, but only for the shares you sold within 30 days (0.1577 shares of VTI sold on 6/17/22).

Also realize we don't know if you have other shares of VTI or VOO (besides those listed above that had losses). If so, and you receive dividends on other shares of VTI that could create some nonqualified dividends rather than qualified dividends if dividends are received within 61 days from shares sold. Same for VOO (if you have other shares besides those above and/or if you sell those 296 shares of VOO recently purchased within 61 days of receiving dividends for VOO if other shares are owned.)
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
Doc7
Posts: 801
Joined: Fri Aug 24, 2007 12:55 pm

Re: Tax loss harvesting question

Post by Doc7 »

Stch wrote: Wed Jun 22, 2022 6:57 pm I had some shares of VTI at Merrill Edge that had unrealized losses, so I decided to try tax loss harvesting, as recommended by so many on here. So far I have the following transactions:

5/23 Sell 528 shares of VTI
5/23 Buy 296 shares of VOO
6/17 Sell 0.1577 shares of VTI

My original plan was to sell VOO and move back into VTI on 6/24. But then I realized it took a really long time, until 6/17, for the remaining fractional share of VTI to sell. So what effect does this have? Am I OK to still sell on 6/24 or should I wait until 30 days after the fractional share sale? Would it just be a wash sale for a single share?


On 6/24 go ahead and move into ITOT, SPTM, SCHB, VTHR, or VV


You could also do ITOT tomorrow, and if it drops 5% , sell and move to SCHB Monday, etc. as long as you average 4-5 days a stock you’ll be back to VTI by the time you get through them all!
livesoft
Posts: 80557
Joined: Thu Mar 01, 2007 8:00 pm

Re: Tax loss harvesting question

Post by livesoft »

You are OK to sell VOO (probably at a loss) and buy back VTI on 6/24. You will create a partial wash sale if the 6/17-sold 0.1577 shares of VTI were sold at a loss, but so what?
Wiki This signature message sponsored by sscritic: Learn to fish.
lazynovice
Posts: 2831
Joined: Mon Apr 16, 2012 10:48 pm

Re: Tax loss harvesting question

Post by lazynovice »

arcticpineapplecorp. wrote: Wed Jun 22, 2022 7:13 pm …..
Also realize we don't know if you have other shares of VTI or VOO (besides those listed above that had losses). If so, and you receive dividends on other shares of VTI that could create some nonqualified dividends rather than qualified dividends if dividends are received within 61 days from shares sold. Same for VOO (if you have other shares besides those above and/or if you sell those 296 shares of VOO recently purchased within 61 days of receiving dividends for VOO if other shares are owned.)
Do you have a source for this? I don’t think that’s correct. If I own 800 shares of VTI that were purchased in 2020, then buy 200 more in May 2022 only to tax loss harvest the 200 shares in early June, the dividend I receive on the 800 shares in June is qualified. I’m not receiving any dividend on the 200 shares. The dividend on the 800 shares is not tainted. Unless you have info I have not seen.
Topic Author
Stch
Posts: 10
Joined: Wed Dec 23, 2020 10:45 am

Re: Tax loss harvesting question

Post by Stch »

Thanks for the quick replies.

I should have stated in my original post that I do have a slight preference for VTI over VOO. And since VOO has had losses over the past month, it seemed like an easy decision to just sell it and get back into VTI.

I didn't know about dividends on other shares being being non-qualified. I do have another taxable account at a different brokerage that has about 100 shares of VTI. Since this is relatively small it seems like this is probably negligible. Do retirement accounts factor into any of this? I have a 401k, Roth IRA, Trad IRA, and HSA that hold a combination of VTI and VTSAX as well as VIIIX, which I believe is a mutual fund equivalent of VOO.
livesoft
Posts: 80557
Joined: Thu Mar 01, 2007 8:00 pm

Re: Tax loss harvesting question

Post by livesoft »

Roth IRA and traditional IRA definitely factor into this. Whether HSA and 401(k) factor into this are controversial.
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
arcticpineapplecorp.
Posts: 10584
Joined: Tue Mar 06, 2012 9:22 pm

Re: Tax loss harvesting question

Post by arcticpineapplecorp. »

lazynovice wrote: Wed Jun 22, 2022 7:54 pm
arcticpineapplecorp. wrote: Wed Jun 22, 2022 7:13 pm …..
Also realize we don't know if you have other shares of VTI or VOO (besides those listed above that had losses). If so, and you receive dividends on other shares of VTI that could create some nonqualified dividends rather than qualified dividends if dividends are received within 61 days from shares sold. Same for VOO (if you have other shares besides those above and/or if you sell those 296 shares of VOO recently purchased within 61 days of receiving dividends for VOO if other shares are owned.)
Do you have a source for this? I don’t think that’s correct. If I own 800 shares of VTI that were purchased in 2020, then buy 200 more in May 2022 only to tax loss harvest the 200 shares in early June, the dividend I receive on the 800 shares in June is qualified. I’m not receiving any dividend on the 200 shares. The dividend on the 800 shares is not tainted. Unless you have info I have not seen.
this is what I was trying to say (perhaps clumsily?):
Holding period for qualified dividends

You are only eligible for the lower tax rate on qualified dividends if you hold the shares which paid the dividend for at least 61 days. If you buy a fund which pays a substantial qualified dividend, wait for the 61 days to be up before selling. This may be relevant if you are buying the fund as a temporary replacement when tax loss harvesting

source: https://www.bogleheads.org/wiki/Timing_ ... duce_taxes
Because he bought VOO but is selling within 30 days and it's around a dividend distribution time I wanted the OP to make sure s/he could inadvertantly turn dividends (if received) from qualified to nonqualified and should either wait the 61 days from when s/he purchased VOO or just hold it, or accept any dividends received from VOO recently purchased may be nonqualified if sold within the time frames above.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
lazynovice
Posts: 2831
Joined: Mon Apr 16, 2012 10:48 pm

Re: Tax loss harvesting question

Post by lazynovice »

arcticpineapplecorp. wrote: Wed Jun 22, 2022 8:57 pm
lazynovice wrote: Wed Jun 22, 2022 7:54 pm
arcticpineapplecorp. wrote: Wed Jun 22, 2022 7:13 pm …..
Also realize we don't know if you have other shares of VTI or VOO (besides those listed above that had losses). If so, and you receive dividends on other shares of VTI that could create some nonqualified dividends rather than qualified dividends if dividends are received within 61 days from shares sold. Same for VOO (if you have other shares besides those above and/or if you sell those 296 shares of VOO recently purchased within 61 days of receiving dividends for VOO if other shares are owned.)
Do you have a source for this? I don’t think that’s correct. If I own 800 shares of VTI that were purchased in 2020, then buy 200 more in May 2022 only to tax loss harvest the 200 shares in early June, the dividend I receive on the 800 shares in June is qualified. I’m not receiving any dividend on the 200 shares. The dividend on the 800 shares is not tainted. Unless you have info I have not seen.
this is what I was trying to say (perhaps clumsily?):
Holding period for qualified dividends

You are only eligible for the lower tax rate on qualified dividends if you hold the shares which paid the dividend for at least 61 days. If you buy a fund which pays a substantial qualified dividend, wait for the 61 days to be up before selling. This may be relevant if you are buying the fund as a temporary replacement when tax loss harvesting

source: https://www.bogleheads.org/wiki/Timing_ ... duce_taxes
Because he bought VOO but is selling within 30 days and it's around a dividend distribution time I wanted the OP to make sure s/he could inadvertantly turn dividends (if received) from qualified to nonqualified and should either wait the 61 days from when s/he purchased VOO or just hold it, or accept any dividends received from VOO recently purchased may be nonqualified if sold within the time frames above.
Thanks for the clarification. I wanted to make sure I wasn’t missing anything.
Post Reply