Tax Harvesting

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ad2007
Posts: 47
Joined: Wed Nov 29, 2017 5:59 am

Tax Harvesting

Post by ad2007 » Tue May 15, 2018 10:55 am

Would these two funds be considered substantially identical?

VWIUX (intermediate term tax exempt bond fund)
VMLTX (limited term tax exempt bond fund)

if so, which Vanguard tax exempt bond fund should I consider for tax harvesting purposes once I sell VWIUX?

Thank you.

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Taylor Larimore
Advisory Board
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Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: Tax Harvesting

Post by Taylor Larimore » Tue May 15, 2018 11:22 am

ad2007 wrote:
Tue May 15, 2018 10:55 am
Would these two funds be considered substantially identical?

VWIUX (intermediate term tax exempt bond fund)
VMLTX (limited term tax exempt bond fund)

if so, which Vanguard tax exempt bond fund should I consider for tax harvesting purposes once I sell VWIUX?

Thank you.
ad2007:

In my opinion, VWIUX and VMLTX are NOT substantially identical. They should be good alternate funds for tax-loss harvesting.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Earl Lemongrab
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Re: Tax Harvesting

Post by Earl Lemongrab » Tue May 15, 2018 1:44 pm

The short answer, always, is "no one knows". The IRS does not issue guidance on the subject other than what is in the publications. An older pub that is obsolete once said that generally different mutual funds are not substantially identical.

No one has presented a case where the IRS has declared different mutual funds to be a wash sale.

So it's all opinion. I'm pretty aggressive (I recently did a TLH with two different S&P 500 ETFs). Anyway, in my opinion, that is not a wash sale.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

Nate79
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Location: Portland, OR

Re: Tax Harvesting

Post by Nate79 » Tue May 15, 2018 5:15 pm

Nope.

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Nestegg_User
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Joined: Wed Aug 05, 2009 1:26 pm

Re: Tax Harvesting

Post by Nestegg_User » Tue May 15, 2018 10:45 pm

NO

it can clearly be shown that the duration is different, so must be sufficiently different

ad2007
Posts: 47
Joined: Wed Nov 29, 2017 5:59 am

Re: Tax Harvesting

Post by ad2007 » Wed May 16, 2018 8:25 am

Thank you all.

Looks like I'll be locking in some losses today.

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