TLH VTIAX [Tax loss harvest - Vanguard Total International Stock]

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loklav
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TLH VTIAX [Tax loss harvest - Vanguard Total International Stock]

Post by loklav » Tue Sep 25, 2018 1:13 pm

Hi all,

I'm considering doing my first THL with VTIAX. I don't have any question about the process right at the moment (i'm following this link https://www.physicianonfire.com/tax-los ... -vanguard/), but I'm trying to figure out if I have a risk of a wash sale and how to avoid it.

Here is the list of my assets by account
  • 401k (current employer)
    • FSEVX Fidelity® Extended Market Index Fund Premium Class
      FSGDX Fidelity® Global ex U.S. Index Fund Premium Class
      FSITX Fidelity® U.S. Bond Index Fund Premium Class
      FXSIX Fidelity® 500 Index Fund Institutional Class
    401k (old employer)
    • TFBL NON US Equity Index ( The Fund is an "index fund" that seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI ACWI ex-USA IMI Net Dividend Return Index (its "Underlying Index").
    My Roth and her Roth
    • VTSAX Vanguard Total Stock Market Index Fund Admiral Shares
    Taxable account
    • VTIAX Vanguard Total International Stock Index Fund Admiral Shares
      VTSAX Vanguard Total Stock Market Index Fund Admiral Shares

What is also the right time to do it? My potential loss is about 300$ at the moment. Even if it's not a lot, I want to put everything in place (may be by exchanging some funds right now...) and have tested the process for later opportunities. Since I suppose we don't want to stay out of the market for too long (30 days), we are by default limited by the number of THL partners that we can use? Am I right? What is a good threshold to decide to THL? How to you do it on your side? Something else to pay attention to?

Finally what are the good TLH partners to use with VTIAX?

Thanks

livesoft
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Re: TLH VTIAX

Post by livesoft » Tue Sep 25, 2018 1:14 pm

What happened to your VTIAX dividend paid this week?

There really is not a practical limit to the "partners" for TLH. VFWAX is a good partner for VTIAX. There are many many more decent partners. When does VFWAX pay a dividend this week?
Last edited by livesoft on Tue Sep 25, 2018 1:16 pm, edited 1 time in total.
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assyadh
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Re: TLH VTIAX

Post by assyadh » Tue Sep 25, 2018 1:15 pm

Given the fact that this is a taxable account at Vanguard, I would go with IXUS which is free to trade

loklav
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Re: TLH VTIAX

Post by loklav » Tue Sep 25, 2018 1:30 pm

livesoft wrote:
Tue Sep 25, 2018 1:14 pm
What happened to your VTIAX dividend paid this week?
I suppose it's going to be automatically reinvested. I just disabled the option today (to transfer to the settlement fund instead). Is it an issue? I also reinvested bi-weekly in VTIAX (last time was last week). Do I have to wait 30 days before TLH?
There really is not a practical limit to the "partners" for TLH. VFWAX is a good partner for VTIAX. There are many many more decent partners. When does VFWAX pay a dividend this week?
Looks like it's the same than VTIAX. Why is it relevant?
Also is there not a potential wash sale between VFWAX and FSGDX (or TFBL) ?

Thanks
Last edited by loklav on Tue Sep 25, 2018 1:32 pm, edited 1 time in total.

livesoft
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Re: TLH VTIAX

Post by livesoft » Tue Sep 25, 2018 1:32 pm

loklav wrote:
Tue Sep 25, 2018 1:30 pm
livesoft wrote:
Tue Sep 25, 2018 1:14 pm
What happened to your VTIAX dividend paid this week?
I suppose it's going to be automatically reinvested. I just disabled the option today (to transfer to the settlement fund instead). Is it an issue? I also reinvested bi-weekly in VTIAX (last time was last week). Do I have to wait 30 days before TLH?
No, but you must sell the shares purchased in the last 30 days including any shares bought this week or I think you will create a partial wash sale.
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loklav
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Re: TLH VTIAX

Post by loklav » Tue Sep 25, 2018 1:33 pm

livesoft wrote:
Tue Sep 25, 2018 1:32 pm
loklav wrote:
Tue Sep 25, 2018 1:30 pm
livesoft wrote:
Tue Sep 25, 2018 1:14 pm
What happened to your VTIAX dividend paid this week?
I suppose it's going to be automatically reinvested. I just disabled the option today (to transfer to the settlement fund instead). Is it an issue? I also reinvested bi-weekly in VTIAX (last time was last week). Do I have to wait 30 days before TLH?
No, but you must sell the shares purchased in the last 30 days including any shares bought this week or I think you will create a partial wash sale.
oh ok!

Also is there not a potential wash sale between VFWAX and FSGDX (or TFBL) ?

livesoft
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Re: TLH VTIAX

Post by livesoft » Tue Sep 25, 2018 1:38 pm

loklav wrote:
Tue Sep 25, 2018 1:33 pm
Also is there not a potential wash sale between VFWAX and FSGDX (or TFBL) ?
I don't think so, but I am some anonymous random poster on an internet forum.
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Whakamole
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Re: TLH VTIAX

Post by Whakamole » Tue Sep 25, 2018 1:43 pm

loklav wrote:
Tue Sep 25, 2018 1:33 pm
Also is there not a potential wash sale between VFWAX and FSGDX (or TFBL) ?
There are three different ways of looking at this.

One is that VFWAX and FSGDX track different indices, therefore there is no potential wash sale.
Two is that VFWAX and FSGDX, though they track different indices, are essentially identical in that they are international funds with emerging market exposure and no small caps and whose indices are substantially identical, therefore wash sale rules apply.
Three is that no funds are identical because of sampling, even if they are tracking the same index, so therefore even if VFWAX and FSGDX said they used the same index, there would be no potential wash sale.

loklav
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Re: TLH VTIAX

Post by loklav » Tue Sep 25, 2018 1:49 pm

livesoft wrote:
Tue Sep 25, 2018 1:38 pm
loklav wrote:
Tue Sep 25, 2018 1:33 pm
Also is there not a potential wash sale between VFWAX and FSGDX (or TFBL) ?
I don't think so, but I am some anonymous random poster on an internet forum.
Ok.
Also VFWAX pays dividends at the same time than VFIAX.
Why is it relevant?

loklav
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Re: TLH VTIAX

Post by loklav » Tue Sep 25, 2018 1:51 pm

Whakamole wrote:
Tue Sep 25, 2018 1:43 pm
loklav wrote:
Tue Sep 25, 2018 1:33 pm
Also is there not a potential wash sale between VFWAX and FSGDX (or TFBL) ?
There are three different ways of looking at this.

One is that VFWAX and FSGDX track different indices, therefore there is no potential wash sale.
Two is that VFWAX and FSGDX, though they track different indices, are essentially identical in that they are international funds with emerging market exposure and no small caps and whose indices are substantially identical, therefore wash sale rules apply.
Three is that no funds are identical because of sampling, even if they are tracking the same index, so therefore even if VFWAX and FSGDX said they used the same index, there would be no potential wash sale.
Ok..
So how (when) do we know if there is a wash sale?

Whakamole
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Re: TLH VTIAX

Post by Whakamole » Tue Sep 25, 2018 1:57 pm

loklav wrote:
Tue Sep 25, 2018 1:51 pm
Whakamole wrote:
Tue Sep 25, 2018 1:43 pm
loklav wrote:
Tue Sep 25, 2018 1:33 pm
Also is there not a potential wash sale between VFWAX and FSGDX (or TFBL) ?
There are three different ways of looking at this.

One is that VFWAX and FSGDX track different indices, therefore there is no potential wash sale.
Two is that VFWAX and FSGDX, though they track different indices, are essentially identical in that they are international funds with emerging market exposure and no small caps and whose indices are substantially identical, therefore wash sale rules apply.
Three is that no funds are identical because of sampling, even if they are tracking the same index, so therefore even if VFWAX and FSGDX said they used the same index, there would be no potential wash sale.
Ok..
So how (when) do we know if there is a wash sale?
I believe brokerages do track wash sales, and I think they use the exact security or variants (so VXUS or VTIAX, same fund.) If it's good enough for them, it's probably good enough for us.

rkhusky
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Re: TLH VTIAX

Post by rkhusky » Tue Sep 25, 2018 2:30 pm

loklav wrote:
Tue Sep 25, 2018 1:51 pm
Ok..
So how (when) do we know if there is a wash sale?
The IRS has not given clear guidance on what is meant by "substantially identical". So, you have to decide how conservative or aggressive you want to be. In his first post in the thread, Whakamole gave three levels of aggressiveness. Take your pick.

PFInterest
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Re: TLH VTIAX

Post by PFInterest » Tue Sep 25, 2018 2:33 pm

livesoft wrote:
Tue Sep 25, 2018 1:14 pm
VFWAX is a good partner for VTIAX. There are many many more decent partners.
i would like you to list your many, many more decent TLH partners for VTIAX at Vanguard? for education purposes of course.

livesoft
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Re: TLH VTIAX

Post by livesoft » Tue Sep 25, 2018 2:39 pm

PFInterest wrote:
Tue Sep 25, 2018 2:33 pm
i would like you to list your many, many more decent TLH partners for VTIAX at Vanguard? for education purposes of course.
Good luck with that. I wasn't thinking of partners at Vanguard. But IXUS was given in this thread by someone else.

But I'll throw you a bone: VTSAX is not a bad temporary TLH partner for VTIAX. Think about it.
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loklav
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Re: TLH VTIAX

Post by loklav » Tue Sep 25, 2018 2:54 pm

rkhusky wrote:
Tue Sep 25, 2018 2:30 pm
loklav wrote:
Tue Sep 25, 2018 1:51 pm
Ok..
So how (when) do we know if there is a wash sale?
The IRS has not given clear guidance on what is meant by "substantially identical". So, you have to decide how conservative or aggressive you want to be. In his first post in the thread, Whakamole gave three levels of aggressiveness. Take your pick.
Well my initial question was to understand if there was a way to discover any potential wash sale before the IRS and the audit....
Looks like there is none...
I wasn't able to find if some people on this forum already experienced a wash sale with VTIAX... So I guess all the recurring recommendations are ok...mmmh

livesoft
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Re: TLH VTIAX

Post by livesoft » Tue Sep 25, 2018 3:01 pm

I experienced a wash sale with VTIAX because I created more than one on purpose. I detailed this in the following thread:

viewtopic.php?t=179414
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rkhusky
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Re: TLH VTIAX

Post by rkhusky » Tue Sep 25, 2018 3:24 pm

loklav wrote:
Tue Sep 25, 2018 2:54 pm
Well my initial question was to understand if there was a way to discover any potential wash sale before the IRS and the audit....
Looks like there is none...
I wasn't able to find if some people on this forum already experienced a wash sale with VTIAX... So I guess all the recurring recommendations are ok...mmmh
I don't think the IRS has ever declared a wash sale on other than the same investment. But many of us want to do the right thing and conform to the spirit of the wash sale rule, even if the likelihood of getting in trouble is vanishingly small. Choosing funds that track different indexes of the same type is as close as many of us want to get, but we are more comfortable with an S&P 500 <-> Total Stock relation. Total Stock <-> Total International would be clearly not substantially identical.

PFInterest
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Re: TLH VTIAX

Post by PFInterest » Tue Sep 25, 2018 3:51 pm

livesoft wrote:
Tue Sep 25, 2018 2:39 pm
PFInterest wrote:
Tue Sep 25, 2018 2:33 pm
i would like you to list your many, many more decent TLH partners for VTIAX at Vanguard? for education purposes of course.
Good luck with that. I wasn't thinking of partners at Vanguard. But IXUS was given in this thread by someone else.

But I'll throw you a bone: VTSAX is not a bad temporary TLH partner for VTIAX. Think about it.
Not a bone I need but thanks.

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Earl Lemongrab
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Re: TLH VTIAX

Post by Earl Lemongrab » Tue Sep 25, 2018 4:42 pm

rkhusky wrote:
Tue Sep 25, 2018 3:24 pm
I don't think the IRS has ever declared a wash sale on other than the same investment. But many of us want to do the right thing and conform to the spirit of the wash sale rule, even if the likelihood of getting in trouble is vanishingly small.
You're making the assumption that you know what the "spirit" of the law is. I'm not convinced of that at all. I do things with TLH because I think I can get away with them but because I believe that the intention of the law is a certain set of principles and I abide by those. With all laws it's very difficult to separate the letter and spirit. These codes have been in effect for a long time, and Congress has had plenty of time to amend them if the spirit and letter were too divergent.

I don't want to get into yet another argument about this, but I did not like the implied "I'm doing it right and these others are being sneaky."
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

rkhusky
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Re: TLH VTIAX

Post by rkhusky » Wed Sep 26, 2018 7:42 am

Earl Lemongrab wrote:
Tue Sep 25, 2018 4:42 pm
rkhusky wrote:
Tue Sep 25, 2018 3:24 pm
I don't think the IRS has ever declared a wash sale on other than the same investment. But many of us want to do the right thing and conform to the spirit of the wash sale rule, even if the likelihood of getting in trouble is vanishingly small.
You're making the assumption that you know what the "spirit" of the law is. I'm not convinced of that at all. I do things with TLH because I think I can get away with them but because I believe that the intention of the law is a certain set of principles and I abide by those. With all laws it's very difficult to separate the letter and spirit. These codes have been in effect for a long time, and Congress has had plenty of time to amend them if the spirit and letter were too divergent.

I don't want to get into yet another argument about this, but I did not like the implied "I'm doing it right and these others are being sneaky."
I was speaking from my point of view and others with similar points of view. Since there is nothing definitive from the IRS, all discussions on "substantially identical" are simply opinions.

loklav
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Re: TLH VTIAX

Post by loklav » Wed Sep 26, 2018 10:30 am

livesoft wrote:
Tue Sep 25, 2018 3:01 pm
I experienced a wash sale with VTIAX because I created more than one on purpose. I detailed this in the following thread:

viewtopic.php?t=179414

Thank you, very interesting!
Looks straightforward to do. I will pull the trigger today and I will not forget to sell the shares that I bought earlier this week. I modified just in time the reinvestment option yesterday and they posted today in the settlement account.

I can not invest in VFWAX because of the $10000 limit. I'm planning to use the ETF fund this time as my TLH partner. Any reason to prefer VFWIX or VEU instead of IXUS for example?

Thanks

assyadh
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Re: TLH VTIAX

Post by assyadh » Wed Sep 26, 2018 10:48 am

IXUS is a total international stock market. Whereas the other ones lack some market segments.

livesoft
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Re: TLH VTIAX

Post by livesoft » Wed Sep 26, 2018 10:49 am

Re: VEU vs IXUS.

Nowadays both trade commission-free at Vanguard. In the past, IXUS did not trade commission-free, so VEU was a better choice then.
VEU does not have small-caps. The positive of that is that it is clearly not substantially identical to VTIAX and one can buy VSS separately to get mid/small caps and even overweight foreign mid/small-caps if one wants that.

The positive for IXUS is that it is all-caps like VTIAX.
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Earl Lemongrab
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Re: TLH VTIAX

Post by Earl Lemongrab » Wed Sep 26, 2018 11:08 am

rkhusky wrote:
Wed Sep 26, 2018 7:42 am
I was speaking from my point of view and others with similar points of view. Since there is nothing definitive from the IRS, all discussions on "substantially identical" are simply opinions.
But that's not what you said, is it? Recall:
But many of us want to do the right thing and conform to the spirit of the wash sale rule, even if the likelihood of getting in trouble is vanishingly small.
That doesn't say anything about having different opinion on "substantially identical" but about wanting to do the "right thing" and implying that other people are just trying to get away with it because they won't be caught.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

rkhusky
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Re: TLH VTIAX

Post by rkhusky » Wed Sep 26, 2018 1:52 pm

Earl Lemongrab wrote:
Wed Sep 26, 2018 11:08 am
rkhusky wrote:
Wed Sep 26, 2018 7:42 am
I was speaking from my point of view and others with similar points of view. Since there is nothing definitive from the IRS, all discussions on "substantially identical" are simply opinions.
But that's not what you said, is it? Recall:
But many of us want to do the right thing and conform to the spirit of the wash sale rule, even if the likelihood of getting in trouble is vanishingly small.
That doesn't say anything about having different opinion on "substantially identical" but about wanting to do the "right thing" and implying that other people are just trying to get away with it because they won't be caught.
Seems like you are saying that disagreeing with you about the definition of "substantially identical" is the same as calling you a tax cheat, which is not true.

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Earl Lemongrab
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Re: TLH VTIAX

Post by Earl Lemongrab » Wed Sep 26, 2018 3:49 pm

rkhusky wrote:
Wed Sep 26, 2018 1:52 pm
Seems like you are saying that disagreeing with you about the definition of "substantially identical" is the same as calling you a tax cheat, which is not true.
I didn't say ANYTHING like that. Not at all. I have no problem with people who disagree, and in fact I know that I'm a bit on the edge in my interpretation (although of course I think it's valid). I was responding only to the "spirit of the law" and "likelihood of getting in trouble" remarks.

I don't put forth my position because I think that it's a low chance of getting caught. I don't think it's in violation of law so there's nothing for them to catch you on.
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rkhusky
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Re: TLH VTIAX

Post by rkhusky » Wed Sep 26, 2018 3:59 pm

Earl Lemongrab wrote:
Wed Sep 26, 2018 3:49 pm
rkhusky wrote:
Wed Sep 26, 2018 1:52 pm
Seems like you are saying that disagreeing with you about the definition of "substantially identical" is the same as calling you a tax cheat, which is not true.
I didn't say ANYTHING like that. Not at all. I have no problem with people who disagree, and in fact I know that I'm a bit on the edge in my interpretation (although of course I think it's valid). I was responding only to the "spirit of the law" and "likelihood of getting in trouble" remarks.

I don't put forth my position because I think that it's a low chance of getting caught. I don't think it's in violation of law so there's nothing for them to catch you on.
But for those that are more cautious, they may choose replacements that are further from their original holdings because they want to reduce the risk of getting in trouble should the IRS decide to reveal the definition, even if the risk of actual trouble is very small.

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Earl Lemongrab
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Re: TLH VTIAX

Post by Earl Lemongrab » Wed Sep 26, 2018 4:27 pm

rkhusky wrote:
Wed Sep 26, 2018 3:59 pm
But for those that are more cautious, they may choose replacements that are further from their original holdings because they want to reduce the risk of getting in trouble should the IRS decide to reveal the definition, even if the risk of actual trouble is very small.
It's a situation filled with vagueness. It only become a situation when an explosion of index funds occurred.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

loklav
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Re: TLH VTIAX

Post by loklav » Wed Sep 26, 2018 5:38 pm

livesoft wrote:
Wed Sep 26, 2018 10:49 am
Re: VEU vs IXUS.

Nowadays both trade commission-free at Vanguard. In the past, IXUS did not trade commission-free, so VEU was a better choice then.
VEU does not have small-caps. The positive of that is that it is clearly not substantially identical to VTIAX and one can buy VSS separately to get mid/small caps and even overweight foreign mid/small-caps if one wants that.

The positive for IXUS is that it is all-caps like VTIAX.
hummm interesting, IXUS and VTIAX track different indices and the last one is composed of two times more stocks than the former one...
They do not look very identical...

Do you (or the other people on this thread) argue about the substantially difference between these two funds?

livesoft
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Re: TLH VTIAX

Post by livesoft » Wed Sep 26, 2018 6:21 pm

I would not worry about it myself.

The reality is that if the IRS comes after someone, then they will be famous. That notoriety would be worth it I would think.
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loklav
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Re: TLH VTIAX

Post by loklav » Wed Sep 26, 2018 8:58 pm

livesoft wrote:
Wed Sep 26, 2018 6:21 pm
I would not worry about it myself.

The reality is that if the IRS comes after someone, then they will be famous. That notoriety would be worth it I would think.
Ok thanks!
Last question: the shares that I bought last week and that I have to sell to be able to TLH, will generate a capital gain. Is it an issue?

MotoTrojan
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Re: TLH VTIAX

Post by MotoTrojan » Wed Sep 26, 2018 11:59 pm

loklav wrote:
Wed Sep 26, 2018 8:58 pm
livesoft wrote:
Wed Sep 26, 2018 6:21 pm
I would not worry about it myself.

The reality is that if the IRS comes after someone, then they will be famous. That notoriety would be worth it I would think.
Ok thanks!
Last question: the shares that I bought last week and that I have to sell to be able to TLH, will generate a capital gain. Is it an issue?
It’ll offset the loss partially but paperwork wise is the easiest solution. Alternatively you can accept the wash sale and I believe the impact is the same but livesoft is the wash sale expert so I’ll let him evaluate.

livesoft
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Re: TLH VTIAX

Post by livesoft » Thu Sep 27, 2018 5:49 am

loklav wrote:
Wed Sep 26, 2018 8:58 pm
Is it an issue?
No, it is not an issue.
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loklav
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Re: TLH VTIAX

Post by loklav » Thu Sep 27, 2018 12:36 pm

ok perfect.
One last technical question specific to Vanguard: looks like I can not exchange my VTIAX shares for IXUS shares, because I don't already have IXUS shares and IXUS is not a vanguard fund: the screen does not allow me to exchange for the new fund IXUS.
So looks like I will have to issue 2 transactions: SELL VTIAX shares and transfer to settlement fund. And then BUY some new IXUS shares.
Is it the right way to do it?

livesoft
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Re: TLH VTIAX

Post by livesoft » Thu Sep 27, 2018 12:39 pm

It is perhaps the only way for you to do it.

If you say owned BND in the same account, then you could sell BND and buy IXUS ... and exchange VTIAX into VBMFX the same day.

But maybe you don't need to have your heart set on IXUS. You could exchange VTIAX into VFWAX or its investor share class fund if you will have at least $3000 from VTIAX.

There are probably all kinds of double-exchanges with other accounts that you could do, too.
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loklav
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Re: TLH VTIAX

Post by loklav » Thu Sep 27, 2018 1:39 pm

livesoft wrote:
Thu Sep 27, 2018 12:39 pm
It is perhaps the only way for you to do it.

If you say owned BND in the same account, then you could sell BND and buy IXUS ... and exchange VTIAX into VBMFX the same day.

But maybe you don't need to have your heart set on IXUS. You could exchange VTIAX into VFWAX or its investor share class fund if you will have at least $3000 from VTIAX.

There are probably all kinds of double-exchanges with other accounts that you could do, too.
yes probably :)
Something I could try: use my dividends to buy some IXUS shares and then now that I own some IXUS shares I should be able to exchange my VTIAX for IXUS...?

livesoft
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Re: TLH VTIAX

Post by livesoft » Thu Sep 27, 2018 1:45 pm

loklav wrote:
Thu Sep 27, 2018 1:39 pm
Something I could try: use my dividends to buy some IXUS shares and then now that I own some IXUS shares I should be able to exchange my VTIAX for IXUS...?
I don't think that will work, but you can give it a try.
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loklav
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Re: TLH VTIAX

Post by loklav » Thu Sep 27, 2018 1:58 pm

livesoft wrote:
Thu Sep 27, 2018 1:45 pm
loklav wrote:
Thu Sep 27, 2018 1:39 pm
Something I could try: use my dividends to buy some IXUS shares and then now that I own some IXUS shares I should be able to exchange my VTIAX for IXUS...?
I don't think that will work, but you can give it a try.
yeah done! VFWIX it is!

Thanks for your help!

Bulgogi Head
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Re: TLH VTIAX

Post by Bulgogi Head » Wed Oct 10, 2018 8:50 pm

I have a related question:

I purchased a variety of international ETF lots over the past two weeks or so. If I sold all of them, and bought a replacement international ETF, would this be a wash sale?

The initial ETF shares would have been bought within the 30 day (before) window, but from what I’ve read I think if I sell them all I should be in the clear?

livesoft
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Re: TLH VTIAX

Post by livesoft » Wed Oct 10, 2018 8:57 pm

No wash sale for what you described.
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Momus
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Re: TLH VTIAX

Post by Momus » Thu Oct 11, 2018 3:04 am

VTSAX Vanguard Total Stock Market
VSIAX Vanguard Small Cap Value
VTIAX Vanguard Total International Stock
VEMAX Vanguard Emerging Markets Stock
VSS VANGUARD Intl E/FTSE ALL-WORLD Small Cap Ex-US

I am looking for substitutes. Do you guys know what to trade it with for TLH purposes?

livesoft
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Re: TLH VTIAX

Post by livesoft » Thu Oct 11, 2018 6:28 am

Momus wrote:
Thu Oct 11, 2018 3:04 am
VTSAX Vanguard Total Stock Market
VSIAX Vanguard Small Cap Value
VTIAX Vanguard Total International Stock
VEMAX Vanguard Emerging Markets Stock
VSS VANGUARD Intl E/FTSE ALL-WORLD Small Cap Ex-US

I am looking for substitutes. Do you guys know what to trade it with for TLH purposes?
VTSAX ---> VLCAX
VSIAX ---> IJS or VIOV
VTIAX ---> VFWAX
VEMAX don't own it
VSS don't own it in a taxable account, maybe DLS?
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Tracy
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Re: TLH VTIAX

Post by Tracy » Fri Oct 12, 2018 3:05 am

I've added a couple to livesoft's sets
VTSAX ---> VLCAX ---> VFIAX
VTIAX ---> VFWAX ---> VTMGX

VFIAX is Vanguard 500 Index Fund
VTMGX is Vanguard Developed Markets Index Fund

These last two aren't as comprehensive as the others, but I've been ok with TLHing into them when I've needed a third fund.

MathIsMyWayr
Posts: 155
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Location: CA

Re: TLH VTIAX

Post by MathIsMyWayr » Fri Oct 12, 2018 10:37 pm

In my Vanguard taxable account, I have realized ST gain/loss, and unrealized ST gain/loss and LT gain. A summary of YTD gain/loss is shown below:
Realized
ST: +$2154 (indiv. stock)
ST: -$210 (Vang Calif LT Tax-exempt, VCITX)
Unrealized
LT: +$2131 (Vang Tot Intl, VTIAX)
ST: -$6183 (Vang Tot Intl, VTIAX)
ST: +$2453 (Vang Tot ST Mkt, VTSAX)
ST: -$690 (Vang Calif LT Tax-exempt, VCITX)

VTIAX was hammered this year and I would like to do TLH. Is it also a good idea to do gain harvest VTSAX? I am thinking of replacing VTIAX with FTSE All-World ex-US Index (VFWAX). A complication is that I also have Vang tot. Intl in my 401(k). 401(k) also has Vang Tot World Stock Index (VTWIX) in which about 56% is US LC. If my investment in 401(k) Vang Tot Intl is x, replacing it and 1.25 times x of Fid 500 Index with VTWIX will end up with the same amount of foreign holdings.

Taxable:
VTSAX > VTSAX (sell and buy back with gain harvest)
VTIAX > VFWAX (TLH)
401(k):
Vang Tot Intl > VTWIX
Fid 500 index > VTWIX (1.25 times Vang Tot Intl)

I will appreciate opinions and suggestions.

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Earl Lemongrab
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Re: TLH VTIAX

Post by Earl Lemongrab » Fri Oct 12, 2018 11:53 pm

401(k) holdings are not subject to wash sales.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

MathIsMyWayr
Posts: 155
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Location: CA

Re: TLH VTIAX

Post by MathIsMyWayr » Sat Oct 13, 2018 12:25 am

Earl Lemongrab wrote:
Fri Oct 12, 2018 11:53 pm
401(k) holdings are not subject to wash sales.
I remember reading to the contrary. For example,
The wash sale rule applies not just to situations when a "substantially identical" purchase is made in the same account, but also when the purchase is made in the individual's IRA account, or even in a spouse's account. This broad application of the wash sale rule seeks to ensure that investors cannot utilize nominally different accounts to maintain their ownership, and still benefit from the loss.

*This includes your spouse’s holdings (IRA, 401k and taxable investments)—even one dividend reinvestment elsewhere can throw off Betterment's careful harvests and reduce your net tax benefit. (The IRS does not consider a shift of ownership from one spouse to another as a true disposal, for purposes of the wash sale rule.)

https://help.betterment.com/hc/en-us/ar ... 5004237903

According to a Fidelity agent, it is not possible to stop dividend re-investment in (my company's) 401(k).

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BL
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Re: TLH VTIAX

Post by BL » Sat Oct 13, 2018 12:47 am

Why are you also talking "tax gain harvest"?

If you are doing tax loss harvesting, I would avoid negating it unless I was dealing with a wash situation or some unwanted investments that I wanted to off-set by losses.

As I am in the 0% CG bracket, it might make more sense for me to TGH than TLH without a good reason.

My impression is that most Bogleheads don't worry about 401ks when doing TLH.

Not sure I would bother with less than $3k, but everyone has their own idea.
Last edited by BL on Sat Oct 13, 2018 12:57 am, edited 1 time in total.

MathIsMyWayr
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Location: CA

Re: TLH VTIAX

Post by MathIsMyWayr » Sat Oct 13, 2018 12:55 am

The rationale for gain harvest is to raise the tax basis. You sell fund A with capital gain of $1,000 and buy it back with the basis $1,000 higher. Next, you sell fund B with capital loss of $1,000. In the end, you have no net capital gain.

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BL
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Re: TLH VTIAX

Post by BL » Sat Oct 13, 2018 1:04 am

MathIsMyWayr wrote:
Sat Oct 13, 2018 12:55 am
The rationale for gain harvest is to raise the tax basis. You sell fund A with capital gain of $1,000 and buy it back with the basis $1,000 higher. Next, you sell fund B with capital loss of $1,000. In the end, you have no net capital gain.
Yes, but if you intend to buy back B or it's TLH partner, aren't you lowering that basis the same amount?

If I were in the 22% tax bracket, I would prefer to use the CL to off-set 22% + state tax, rather than the 15% CG tax.

MathIsMyWayr
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Location: CA

Re: TLH VTIAX

Post by MathIsMyWayr » Sat Oct 13, 2018 1:30 am

BL wrote:
Sat Oct 13, 2018 1:04 am
MathIsMyWayr wrote:
Sat Oct 13, 2018 12:55 am
The rationale for gain harvest is to raise the tax basis. You sell fund A with capital gain of $1,000 and buy it back with the basis $1,000 higher. Next, you sell fund B with capital loss of $1,000. In the end, you have no net capital gain.
Yes, but if you intend to buy back B or it's TLH partner, aren't you lowering that basis the same amount?

If I were in the 22% tax bracket, I would prefer to use the CL to off-set 22% + state tax, rather than the 15% CG tax.
Interesting observation. I find it difficult to dispute you. All this maneuvering may be zero sum unless some outsider gains or loses, i.e., tax collectors. This is even more complicated. In a straight TLH, you lower the basis by $1,000, but saves tax on $1,000. When you sell the fund later with CG, then you will pay tax on $1,000 of CG, if CG is over $1,000. TLH may be beneficial only if there is a difference in applicable tax rates as you pointed out.

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