Tax loss harvesting question

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Gamma Ray
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Tax loss harvesting question

Post by Gamma Ray » Tue Oct 16, 2018 12:43 am

Hi everyone, market is down enough that I can get a bit more tax losses harvested again.

On 9/19 I bought VOO
Today 10/17, VOO is down, can I sell it and get VTI, or do I have to keep it 30 days before I can sell?
I did TLH once earlier this year by selling VTI and getting VOO but I think that was back in April.
Or to keep things nice and seperate, should I buy a 3rd ETF like VV so that I can remember better what I did?

PS: Where can I see how much in losses I accumulated in VG so far by selling at a loss, or do I have to wait until end of the year?
Thanks.

jsmoove123
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Re: Tax loss harvesting question

Post by jsmoove123 » Tue Oct 16, 2018 1:00 am

Sell all the VOO shares that you bought on 9/17 and there will be no wash sale. If you don't sell all of them, you'll end up with a partial/complete wash sale.

There's a "Cost Basis" tab which shows your lots (if you picked specific ID of shares) and is useful for TLH purposes.

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iceport
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Re: Tax loss harvesting question

Post by iceport » Tue Oct 16, 2018 1:07 am

You can sell at a loss now. There's no minimum holding time to book a loss. You could buy VOO in the morning, watch it crash during the day, and sell it at a loss before the market closes. As long as you don't hold replacement stock bought within the 61 day wash sale period, you can claim the loss; there is no wash sale.

You don't need a third fund. There's nothing wrong with a "round trip" back to your original holding after waiting out the wash sale period.

As far as tracking your losses, ideally, you should keep your own records of your taxable holdings in a spreadsheet. (Examples are here: Tax lot tracking.) If you are at Vanguard, there is a "Cost basis" tab that shows gains and losses, with its own separate tabs for "realized" gains and losses and "unrealized" gains and losses.
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iceport
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Re: Tax loss harvesting question

Post by iceport » Tue Oct 16, 2018 1:12 am

jsmoove123 wrote:
Tue Oct 16, 2018 1:00 am
Sell all the VOO shares that you bought on 9/17 and there will be no wash sale. If you don't sell all of them, you'll end up with a partial/complete wash sale.
This isn't correct. Shares you bought at the same time are not replacement shares for a partial sale of those same shares. See Example 2 here: Wash Sales and Replacement Stock
"Discipline matters more than allocation.” ─William Bernstein

rkhusky
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Re: Tax loss harvesting question

Post by rkhusky » Tue Oct 16, 2018 8:50 am

Gamma Ray wrote:
Tue Oct 16, 2018 12:43 am
On 9/19 I bought VOO
Today 10/17, VOO is down, can I sell it and get VTI, or do I have to keep it 30 days before I can sell?
Today is 10/16.

Did you buy on 9/17 or 9/19?

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Gamma Ray
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Re: Tax loss harvesting question

Post by Gamma Ray » Tue Oct 16, 2018 6:42 pm

iceport wrote:
Tue Oct 16, 2018 1:07 am
You can sell at a loss now. There's no minimum holding time to book a loss. You could buy VOO in the morning, watch it crash during the day, and sell it at a loss before the market closes. As long as you don't hold replacement stock bought within the 61 day wash sale period, you can claim the loss; there is no wash sale.

You don't need a third fund. There's nothing wrong with a "round trip" back to your original holding after waiting out the wash sale period.

As far as tracking your losses, ideally, you should keep your own records of your taxable holdings in a spreadsheet. (Examples are here: Tax lot tracking.) If you are at Vanguard, there is a "Cost basis" tab that shows gains and losses, with its own separate tabs for "realized" gains and losses and "unrealized" gains and losses.

Thanks,
I will try to track on my own, I thought VG would do it for me, I suppose I will get tax forms with losses at the end of the year from VG anyway, right? Or do I have to report them on my own?

Cost basis is always spec ID for me, which is why I can easily TLH since I know which purchases have gains and which ones have losses, even though my complete holding is in green, certain specific purchase ID's might be in loss, and that's how I decide if I should sell/TLH or not. This is what most people do, right? Spec ID, checking which ones have loss, if any, and sell/buy something else.
rkhusky wrote:
Tue Oct 16, 2018 8:50 am
Gamma Ray wrote:
Tue Oct 16, 2018 12:43 am
On 9/19 I bought VOO
Today 10/17, VOO is down, can I sell it and get VTI, or do I have to keep it 30 days before I can sell?
Today is 10/16.

Did you buy on 9/17 or 9/19?

Sorry, I didn't realize we passed midnight by the time I posted this.
So now we are going into 10/17 (Wed).
I bought VOO on 9/19 with brand new money, it wasn't a TLH, I flopped down 25k which is about 23.5now (I think it went up a little by closing time today so loss is about 1k now).
Since this was a brand new money, I wanted to make sure I could sell it at a loss without waiting for 30 days to pass.



Thanks for the replies. Should have sold this morning I guess, but can't complain It gained $500 today. Not much compared to some people here, but I try my best to save/invest as much as possible.

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iceport
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Re: Tax loss harvesting question

Post by iceport » Wed Oct 17, 2018 12:14 pm

Gamma Ray wrote:
Tue Oct 16, 2018 6:42 pm
I will try to track on my own, I thought VG would do it for me, I suppose I will get tax forms with losses at the end of the year from VG anyway, right? Or do I have to report them on my own?

Cost basis is always spec ID for me, which is why I can easily TLH since I know which purchases have gains and which ones have losses, even though my complete holding is in green, certain specific purchase ID's might be in loss, and that's how I decide if I should sell/TLH or not. This is what most people do, right? Spec ID, checking which ones have loss, if any, and sell/buy something else.
It's always best to keep your own records also, but yes, Vanguard will provide the tax forms. You still need to report them on your own tax returns, and the reporting should match.

Yes, I look for red entries on the unrealized gains/losses page at Vanguard to see if it's worth TLH. But I have older non-covered shares that don't show up in individual tax lots at Vanguard. So I use my own spreadsheet for those (not that they're ever likely to show losses anymore).
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Gamma Ray
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Re: Tax loss harvesting question

Post by Gamma Ray » Wed Oct 17, 2018 12:46 pm

Thank you, since this was new money (not TLH sourced purchase) I can sell it whenever there are losses and buy something else; How about if I sell this VTI at a loss, buy VV (for example) and VV loses another $600 tomorrow in one day, Can I sell VV and buy something else and then have another $600 tax loss harvested in 1 day? Or are there limits to this type of trading?

livesoft
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Re: Tax loss harvesting question

Post by livesoft » Wed Oct 17, 2018 12:51 pm

Gamma Ray wrote:
Wed Oct 17, 2018 12:46 pm
Thank you, since this was new money (not TLH sourced purchase) I can sell it whenever there are losses and buy something else; How about if I sell this VTI at a loss, buy VV (for example) and VV loses another $600 tomorrow in one day, Can I sell VV and buy something else and then have another $600 tax loss harvested in 1 day? Or are there limits to this type of trading?
Yes, you can sell that VV, but you probably cannot buy something the same day because of the "Free riding" SEC rules (unless you have other money to use). Before you buy something else, the sell of VTI will have settle with T+2. Google "free riding."
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Nicolas
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Re: Tax loss harvesting question

Post by Nicolas » Wed Oct 17, 2018 1:12 pm

livesoft wrote:
Wed Oct 17, 2018 12:51 pm
Gamma Ray wrote:
Wed Oct 17, 2018 12:46 pm
Thank you, since this was new money (not TLH sourced purchase) I can sell it whenever there are losses and buy something else; How about if I sell this VTI at a loss, buy VV (for example) and VV loses another $600 tomorrow in one day, Can I sell VV and buy something else and then have another $600 tax loss harvested in 1 day? Or are there limits to this type of trading?
Yes, you can sell that VV, but you probably cannot buy something the same day because of the "Free riding" SEC rules (unless you have other money to use). Before you buy something else, the sell of VTI will have settle with T+2. Google "free riding."
I TLHed the day before yesterday, and I bought my TLH partner ETF within 5 minutes of my loss sale. But since I'm using a margin account I don't need to worry about settling. I didn't have a free ride. Am I right?

VCO
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Re: Tax loss harvesting question

Post by VCO » Wed Oct 17, 2018 1:31 pm

Piggybacking on this question very slightly and seeking clarification on the comments set forth above.

If you sell a Spec ID that you purchased less than 30 days ago, do you incur a wash sale so long as you sell all of your Spec ID?

Stated differently, you do not need to sell all of your holding in a fund, just all of your holding in the Spec ID lot, right?

(Assume for this that you have no other wash sale issues, nothing substantially identical nor do you purchase within 30 days after such sale).

Thanks,

VCO

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iceport
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Re: Tax loss harvesting question

Post by iceport » Wed Oct 17, 2018 1:35 pm

VCO wrote:
Wed Oct 17, 2018 1:31 pm
Piggybacking on this question very slightly and seeking clarification on the comments set forth above.

If you sell a Spec ID that you purchased less than 30 days ago, do you incur a wash sale so long as you sell all of your Spec ID?

Stated differently, you do not need to sell all of your holding in a fund, just all of your holding in the Spec ID lot, right?

(Assume for this that you have no other wash sale issues, nothing substantially identical nor do you purchase within 30 days after such sale).

Thanks,

VCO
No, you do not have to sell all of the one-time purchase. See Example 2 in the linked article. viewtopic.php?p=4168169#p4168169
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deltaneutral83
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Re: Tax loss harvesting question

Post by deltaneutral83 » Wed Oct 17, 2018 1:40 pm

I TLH'd VXUS into IXUS back in August and then back into VXUS last Friday. Bought and sold on same days in Aug/Oct, no free riding and no margin on the account. Assume if I was free riding I would have gotten 74 emails and phone calls from Merrill.

innominate21
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Re: Tax loss harvesting question

Post by innominate21 » Wed Oct 17, 2018 2:22 pm

VCO wrote:
Wed Oct 17, 2018 1:31 pm
Piggybacking on this question very slightly and seeking clarification on the comments set forth above.

If you sell a Spec ID that you purchased less than 30 days ago, do you incur a wash sale so long as you sell all of your Spec ID?

Stated differently, you do not need to sell all of your holding in a fund, just all of your holding in the Spec ID lot, right?

(Assume for this that you have no other wash sale issues, nothing substantially identical nor do you purchase within 30 days after such sale).

Thanks,

VCO
Piggybacking off this piggyback. I just started my taxable account last month and bought VTI and VXUS in one fell swoop. Naturally they are down. I would need to sell all of VTI and purchase SCHB for example in order to TLH since I bought all my VTI at once? Should I even consider doing it? Thanks.

EDIT: Or should I do VTI --> ITOT since I have SCHB in my Roth to avoid a wash sale?

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Re: Tax loss harvesting question

Post by livesoft » Wed Oct 17, 2018 6:40 pm

Nicolas wrote:
Wed Oct 17, 2018 1:12 pm
I TLHed the day before yesterday, and I bought my TLH partner ETF within 5 minutes of my loss sale. But since I'm using a margin account I don't need to worry about settling. I didn't have a free ride. Am I right?
Correct. That is no free riding and you could have done that without having a margin account.

WIthout a margin account, selling the 2nd ETF (before the first sell settles) and trying to buy a 3rd ETF would be free riding.

With a margin account, I guess doing so would work, but you might be charged margin interest.
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Re: Tax loss harvesting question

Post by Gamma Ray » Wed Oct 17, 2018 11:56 pm

Edit:
Looks like VG also warns you not to sell the funds you just bought before they settled. Thank you Livesoft for the reminder.
Please be aware that you are using unsettled funds for this purchase.
It is considered a trade violation under Federal Reserve Regulation T when unsettled funds are used to make a purchase and the security purchased is subsequently sold prior to the settlement date of the funding sale. To avoid a trade restriction being placed on your account, you must either avoid selling these shares before the funding sale has settled or deposit additional funds into your settlement account to cover the amount of the purchase. Please call 877-662-7447 if you have any questions.

Are you sure you want to continue with this order?

livesoft wrote:
Wed Oct 17, 2018 12:51 pm
Gamma Ray wrote:
Wed Oct 17, 2018 12:46 pm
Thank you, since this was new money (not TLH sourced purchase) I can sell it whenever there are losses and buy something else; How about if I sell this VTI at a loss, buy VV (for example) and VV loses another $600 tomorrow in one day, Can I sell VV and buy something else and then have another $600 tax loss harvested in 1 day? Or are there limits to this type of trading?
Yes, you can sell that VV, but you probably cannot buy something the same day because of the "Free riding" SEC rules (unless you have other money to use). Before you buy something else, the sell of VTI will have settle with T+2. Google "free riding."

Thank you so much for this other great example. I will make sure not to sell less than T+2 to avoid running into violation.

As for "similar, but not similar enough to trigger wash sale" list of funds, I assume this must have been discussed hundreds of times, but was there ever a list of these funds, VOO/VTI/VV this trio is perfectly fine to swap without being considered wash, even though they seem to track rather similar indexes?

Should I sell all my ETF's and go with Mutual Funds tracking same indexes to make TLH easier with "exchange" as opposed to selling then buying?
Actually-- I just remembered the reason I went with ETFs. I keep Mutual Funds in my Tax Advantaged accounts, and ETF's in Taxable accounts so that we can avoid a automated purchase in tax-advantage account to mess with my TLH.
I remember reading IRS may consider it a wash sale if I have same Taxable fund that I just sold at a loss is automatically happens to be purchased in my Tax-advantaged account.

I thought we could place sell order and place buy order right after that, but it looks like VG does not make pending sale funds available for another purchase until market opens and sale goes through? Strange. Can't we just tell VG to sell and then immediately buy something else once it's sold?

livesoft
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Re: Tax loss harvesting question

Post by livesoft » Thu Oct 18, 2018 8:40 am

I've commented on BLUE below.
Gamma Ray wrote:
Wed Oct 17, 2018 11:56 pm
Thank you so much for this other great example. I will make sure not to sell less than T+2 to avoid running into violation.
While that will work to avoid into running into a free-riding violation, I think it is OK to sell in less than T+2 as I noted, but the cash cannot be used for another buy until settlement.

As for "similar, but not similar enough to trigger wash sale" list of funds, I assume this must have been discussed hundreds of times, but was there ever a list of these funds, VOO/VTI/VV this trio is perfectly fine to swap without being considered wash, even though they seem to track rather similar indexes?
Yes this trio is perfectly fine.

Should I sell all my ETF's and go with Mutual Funds tracking same indexes to make TLH easier with "exchange" as opposed to selling then buying?
Actually-- I just remembered the reason I went with ETFs. I keep Mutual Funds in my Tax Advantaged accounts, and ETF's in Taxable accounts so that we can avoid a automated purchase in tax-advantage account to mess with my TLH.
I remember reading IRS may consider it a wash sale if I have same Taxable fund that I just sold at a loss is automatically happens to be purchased in my Tax-advantaged account.

I thought we could place sell order and place buy order right after that, but it looks like VG does not make pending sale funds available for another purchase until market opens and sale goes through? Strange. Can't we just tell VG to sell and then immediately buy something else once it's sold?
You and Vanguard cannot know how much money the sale will create because you will not know the price of the sell until it executes, so it follows that you cannot know how many ETF shares you can buy until the sell order is executed and you also know the price of the buy order.
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Gamma Ray
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Re: Tax loss harvesting question

Post by Gamma Ray » Thu Oct 18, 2018 10:15 am

livesoft wrote:
Thu Oct 18, 2018 8:40 am
I've commented on BLUE below.
Gamma Ray wrote:
Wed Oct 17, 2018 11:56 pm
Thank you so much for this other great example. I will make sure not to sell less than T+2 to avoid running into violation.
While that will work to avoid into running into a free-riding violation, I think it is OK to sell in less than T+2 as I noted, but the cash cannot be used for another buy until settlement.

As for "similar, but not similar enough to trigger wash sale" list of funds, I assume this must have been discussed hundreds of times, but was there ever a list of these funds, VOO/VTI/VV this trio is perfectly fine to swap without being considered wash, even though they seem to track rather similar indexes?
Yes this trio is perfectly fine.

Should I sell all my ETF's and go with Mutual Funds tracking same indexes to make TLH easier with "exchange" as opposed to selling then buying?
Actually-- I just remembered the reason I went with ETFs. I keep Mutual Funds in my Tax Advantaged accounts, and ETF's in Taxable accounts so that we can avoid a automated purchase in tax-advantage account to mess with my TLH.
I remember reading IRS may consider it a wash sale if I have same Taxable fund that I just sold at a loss is automatically happens to be purchased in my Tax-advantaged account.

I thought we could place sell order and place buy order right after that, but it looks like VG does not make pending sale funds available for another purchase until market opens and sale goes through? Strange. Can't we just tell VG to sell and then immediately buy something else once it's sold?
You and Vanguard cannot know how much money the sale will create because you will not know the price of the sell until it executes, so it follows that you cannot know how many ETF shares you can buy until the sell order is executed and you also know the price of the buy order.

Perfect. Thank you Livesoft.
In reference to avoiding free riding, there is one disadvantage of VG since we cannot execute instant buy unless we have funds in our brokerage settlement account.
This makes it difficult to use "own cash" if the new fund dropped a lot in one day, and you want to sell and buy something else do to another TLH at the end of 2nd day.

So Selling VTI on day 1, buying VOO same day (TLH), if VOO dropped on Day 2, for us to be able to sell (TLH) and then buy VV, we can just sell VOO (TLH) and then we would need to use our existing funds in settlement brokerage account, then we would not free ride, right?

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Re: Tax loss harvesting question

Post by livesoft » Thu Oct 18, 2018 10:16 am

Right.
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Gamma Ray
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Re: Tax loss harvesting question

Post by Gamma Ray » Fri Oct 19, 2018 10:31 am

Hi Livesoft,
I wanted to see if there was more drop by going into sell screen, and checking what happens if we try to sell end of next day;
I noticed VG will not allow us to sell until it's after T+2 anyway. The funds don't show up as available in Sell interaction screen.
So it seems like we can't sell the newly purchased bond anyway.

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Re: Tax loss harvesting question

Post by Gamma Ray » Thu Oct 25, 2018 12:38 am

Hi Livesoft,
The VOO shares I bought last week are down another $1200.
Can I sell the VOO I bought 7 days ago (source of funds was the sale of VTI at loss 1 week ago) and buy VV (or anything else) today to realize another $1200 loss?

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