Specific Share Identification for Mutual Funds at Vanguard

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johndcraig

Specific Share Identification for Mutual Funds at Vanguard

Post by johndcraig » Tue Jul 17, 2007 4:48 pm

I recall that Andrew and perhaps others have figured out how to get Vanguard to deal with specific identification in a manner acceptable to the IRS. I called Vanguard, but with less than satisfactory results. I have the info needed to specifically identify shares sold; can someone help with the process involving Vanguard? Thanks

John

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Post by Grandpaboys » Tue Jul 17, 2007 7:23 pm

Having dealt with the sell of specific shares for over 20 years, I can tell you that Vanguard will not be cooperative in any confirmation. I have never had a problem in supporting sell of specific shares with the IRS. They have always accepted my detail in cost of shares which is given to three decimal points on the number of shares sold. However, I always sell in lots of what shares were purchased. In other words I purchase 100.125 shares and I sell 100.125 shares. I do not look to Vanguard for support, it's not worth the battle, especially when dealing with the IRS. Buy and sell the same lot and forget about Vanguard.
Good Day | GP

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Post by jma9000 » Tue Jul 17, 2007 7:38 pm

I could've sworn that just a couple of days ago Vanguard announced that they'd start specifically identifying lots. Could've sworn. And yet now I can't find that announcement anywhere; otherwise I'd post it. Anyway, it may have been limited to Vanguard Brokerage Services (i.e., not as much help for Vanguard Funds). And it won't help you for past purchases.

I recall posting a similar question in the "other" Vanguard forum at M*, and it was poster Mel Lindauer who had experience with this issue and figured out a good procedure and posted it.

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Specific ID Method @ Vanguard

Post by Mel Lindauer » Tue Jul 17, 2007 7:45 pm

Hi John:

Here's how I've done it on a number of occasions:

1. I write a letter to my Flagship Rep, identifying all the specific shares I'm selling, listing each group by the date of purchase and number of shares.
2. They send me a copy of the letter back, stamped and dated. That receipt is what you'd want to hold on to for your records.

Regards,

Mel

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Re: Specific ID Method @ Vanguard

Post by Wagnerjb » Tue Jul 17, 2007 8:54 pm

Mel Lindauer wrote:Hi John:

Here's how I've done it on a number of occasions:

1. I write a letter to my Flagship Rep, identifying all the specific shares I'm selling, listing each group by the date of purchase and number of shares.
2. They send me a copy of the letter back, stamped and dated. That receipt is what you'd want to hold on to for your records.

Regards,

Mel
I have done this exact same thing, using individual stocks. However, I must acknowledge that I have encountered several Vanguard rep's who didn't know about this. My assigned Flagship rep knew about this (maybe because I told him I wanted to use it), but when my specific rep was busy and another answered the call - more often than not they weren't familiar with this procedure.

Best wishes.
Andy

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Ugh

Post by frose2 » Tue Jul 17, 2007 9:07 pm

I am sorry to say that my experience is like grandpaboys' and not like Mel's or wagnerjb's. I was specifically informed by a Vanguard rep that Vanguard does not support selling specific shares. This was for a Vanguard mutual fund.

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Re: Ugh

Post by whitemiata » Tue Jul 17, 2007 9:14 pm

frose2 wrote:I am sorry to say that my experience is like grandpaboys' and not like Mel's or wagnerjb's. I was specifically informed by a Vanguard rep that Vanguard does not support selling specific shares. This was for a Vanguard mutual fund.
What the rep meant is that Vanguard will not maintain that information for you. You still have every right in the world to do specific shares identification.

The only remaining problem is how to properly document the transaction if you are going to do the transaction online. If you do it by mail it's a no brainer as you can write your letter of instruction and include the share info there. My plan is to do the transaction online and write a letter with my explanation of intent. keep a copy in my records and mail the other to Vanguard with a request that they acknowledge receipt and keep the letter in my records.

Alessandro

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Re: Ugh

Post by alvinsch » Tue Jul 17, 2007 9:47 pm

whitemiata wrote:
frose2 wrote:I am sorry to say that my experience is like grandpaboys' and not like Mel's or wagnerjb's. I was specifically informed by a Vanguard rep that Vanguard does not support selling specific shares. This was for a Vanguard mutual fund.
What the rep meant is that Vanguard will not maintain that information for you. You still have every right in the world to do specific shares identification.

The only remaining problem is how to properly document the transaction if you are going to do the transaction online. If you do it by mail it's a no brainer as you can write your letter of instruction and include the share info there. My plan is to do the transaction online and write a letter with my explanation of intent. keep a copy in my records and mail the other to Vanguard with a request that they acknowledge receipt and keep the letter in my records.

Alessandro
I've done specific identification with Vanguard on three occasions and was told by my rep I could sell online and send them a letter explaining the shares that were going to be sold at the close of the market on that day. I was told this letter would go into my file and I could get a copy if audited for verification.

On all three occasions I requested they return me a copy of my letter with a date stamp but they only did it once. I recall previous conversions where people also confirmed they only return about one out of three letters.

Also, as suggested by another poster, I sell the exact number of shares to 3 decimal points that I bought on the specific date for more "evidence" of my obvious intent. While mailing specific share ID information prior to the close of the market on the day I sell online may not meet the exact letter of the law, I believe I have sufficient evident to satisfy all but the most anal auditor. ;)

Sure would be nice if Vanguard would upgrade their systems to allow one to specifically ID shares online when one enters the sell order.

- Al

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Post by kramer » Tue Jul 17, 2007 10:48 pm

I could've sworn that just a couple of days ago Vanguard announced that they'd start specifically identifying lots. Could've sworn. And yet now I can't find that announcement anywhere; otherwise I'd post it. Anyway, it may have been limited to Vanguard Brokerage Services (i.e., not as much help for Vanguard Funds). And it won't help you for past purchases.
Yes, they sent me a letter about this around three weeks ago. It was for VBS. By default, their cost accounting is FIFO. But there is an option of Highest Cost First (HCFO?). But you need to go into your account and select this option. I just did it the other day. After I logged in, I noticed a Cost Basis Accounting link and remembered the letter they had sent me -- I was able to change it from FIFO to HCFO. I think the service started on July 17 (today), if I remember correctly.
Mel wrote: I write a letter to my Flagship Rep,
Hi Mel, you address this to a specific person, c/o Vanguard? That seems like a good strategy to me.

I had always thought another way besides snail mail would be to do this via secure message from within an account and print it out (along with the request acknowledgment, if they provide one).

I also have tried to sell in batches equivalent to purchase sizes. It is sad, though, that the tax tail has to wag the investment dog!

Kramer

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Post by Wagnerjb » Wed Jul 18, 2007 7:53 am

Kramer said:
I also have tried to sell in batches equivalent to purchase sizes. It is sad, though, that the tax tail has to wag the investment dog!
I don't think that is really necessary. Of course, you should sell when the time is right - but optimize taxes when you are selling anyway. If you keep good records, I see no reason to sell in equivalent lots to the ones you bought.

Best wishes.
Andy

Topic Author
johndcraig

Post by johndcraig » Wed Jul 18, 2007 12:05 pm

Thanks for the replies

I have been working with Vanguard on this to see if we can come up with a more streamlined, efficient and uniform approach that meets the requirements set forth in IRS Publication 564.

I’ll keep you posted.

John

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Secure e-mail

Post by Alex Frakt » Wed Jul 18, 2007 12:53 pm

I use secure e-mail and request a confirmation that they have received it. No problems so far. Here's one I sent last week.
I have placed an order (confirmation number XXXXXX) on 7/12/2007 for the sale of 192.085 shares of Vanguard European Stock Index Inv (VEURX). Since I use the specific share identification method for determining capital gains, I wish these shares to come from the following specified lots:

- 67.720 shares purchased 08/03/2004
- 45.208 shares purchased 03/11/2004
- 49.900 shares purchased 10/30/2003
- 29.257 shares purchased 11/27/2002

I understand that I am responsible for tracking my cost basis. Please confirm that you have received this message via secure e-mail (preferred) or mail. It is not necessary to call.

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Re: Secure e-mail

Post by Mel Lindauer » Wed Jul 18, 2007 1:12 pm

lowwall wrote:I use secure e-mail and request a confirmation that they have received it. No problems so far. Here's one I sent last week.
I have placed an order (confirmation number XXXXXX) on 7/12/2007 for the sale of 192.085 shares of Vanguard European Stock Index Inv (VEURX). Since I use the specific share identification method for determining capital gains, I wish these shares to come from the following specified lots:

- 67.720 shares purchased 08/03/2004
- 45.208 shares purchased 03/11/2004
- 49.900 shares purchased 10/30/2003
- 29.257 shares purchased 11/27/2002

I understand that I am responsible for tracking my cost basis. Please confirm that you have received this message via secure e-mail (preferred) or mail. It is not necessary to call.
Hi Alex:

That's almost the precise wording I use in my letter to my Flagship Rep. Your method would be even faster and cheaper.

Best regards,

Mel

Topic Author
johndcraig

Post by johndcraig » Wed Jul 18, 2007 1:37 pm

Seems we’re pretty much on the same page

Here are sample emails that I emailed to the Vanguard Compliance to see if they approve. The emails use the IRS wording in Publication 564. The advantage of email is that it avoids the hassle and permits notification on the same day as the sale. It’s necessary to get Vanguard buy in to any approach because the IRS requires (though doesn’t really enforce) the taxpayer to receive written confirmation from your broker within a reasonable time of “your specification of the particular shares sold or transferred.”
SAMPLE EMAIL LETTER

Joe Representative
Vanguard
July 1, 2007

Today I will sell the following specified shares online:

XYZ shares Account #12345678


Date acquired # Shares cost/share Cost basis
3/24/06 3.601 $12.47 $44.90
12/28/05 241.66 $11.59 $2,800.84
3/18/05 2.082 $10.55 $21.96
12/29/04 2.657 $10.25 $27.23

Totals 250.000 $2,894.93



Please acknowledge receipt of this note and confirm my specification of the particular shares sold.

Sam Investor
(212)555-5555


SAMPLE EMAIL REPLY

Sam Investor

I acknowledge receipt of your email on July 1, 2007, and confirm your specification of the particular shares sold after close on that date.

Joe Representative
Vanguard
Of course, if Vanguard chooses to reply by letter instead of email, they can do so. I’ll let you know after I hear from Vanguard; they said they should get back to me soon.

John

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Post by indexfundfan » Wed Jul 18, 2007 1:56 pm

Good discussion.

I understand that once you made specific lot sale (not from VBS), Vanguard's software would not track the correct cost basis for you and you will have to track it yourself. True?
My signature has been deleted.

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Post by Mel Lindauer » Wed Jul 18, 2007 2:01 pm

indexfundfan wrote:Good discussion.

I understand that once you made specific lot sale (not from VBS), Vanguard's software would not track the correct cost basis for you and you will have to track it yourself. True?
I seem to recall that that was true but you may want to double check, just to be sure.

Regards,

Mel

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cost basis for Admiral shares

Post by fundtalk » Wed Jul 18, 2007 3:18 pm

Does anyone have experience with tracking cost basis for a fund in which you originally bought investor class shares, but eventually changed over to Admiral shares?

I'm assuming Vanguard automatically calculates your new average cost basis and adjusts for the differing share prices of the different fund classes after your conversion.

Does this prohibit you from selling specific lots in the future? If not, how would you determine your specific lot after changing from investor class to admiral class (or ETF shares for that matter?)

thanks,
JD

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Re: cost basis for Admiral shares

Post by alvinsch » Wed Jul 18, 2007 3:31 pm

fundtalk wrote:Does anyone have experience with tracking cost basis for a fund in which you originally bought investor class shares, but eventually changed over to Admiral shares?

I'm assuming Vanguard automatically calculates your new average cost basis and adjusts for the differing share prices of the different fund classes after your conversion.

Does this prohibit you from selling specific lots in the future? If not, how would you determine your specific lot after changing from investor class to admiral class (or ETF shares for that matter?)

thanks,
JD
Yes, I've sold specific lots of VWILX that were originally bought as VWIGX. To convert I use the ratio of VWILX post conversion shares divided by VWIGX pre-conversion shares at the time of the admiral conversion. In my case the ratio is 0.314638. So if I wanted to sell a specific lot of shares bought as VWIGX, let's say 100 shares, then I'd sell 100*0.314638=31.464 shares of VWILX.

Yes, Vanguard handles all of it if you use average cost basis.

Hope that helps.
- Al

Topic Author
johndcraig

Post by johndcraig » Wed Jul 18, 2007 3:57 pm

Al/JD

Of course you will still have to go back to determine the $ cost of the 100/31.464 shares. I found that when the transfer was made they discarded all the pre-transfer info from my accounts. They told me that they could reconstruct this info and mail it to me.

John

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Post by alvinsch » Wed Jul 18, 2007 4:15 pm

johndcraig wrote:Al/JD

Of course you will still have to go back to determine the $ cost of the 100/31.464 shares. I found that when the transfer was made they discarded all the pre-transfer info from my accounts. They told me that they could reconstruct this info and mail it to me.

John
Yes of course. I record all my purchases/sales for each fund I own and also keep all the end of year statements I receive from Vanguard. Other than average cost basis I don't use any of Vanguard's online historical information for tax purposes.

- Al

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Vanguard's reply

Post by Alex Frakt » Wed Jul 18, 2007 4:25 pm

Just got back to the reply to my "secure e-mail" quoted above. They've added the stuff about mailing them since the last time I did this. The key sentence still seems to be there (in bold). But, if you are really worried about this, you may want to stick to mail.
Thank you for your e-mail. We appreciate the time you have taken to contact us.

If you need to sell shares using the 'specific share identification' method, you should plan on conducting your transactions in writing, we cannot accept clerical or monetary items via e-mail. It should be noted that telephone redemption or exchange and checkwriting defeat the purpose of using the specific share identification method.

Please be advised that we will keep your letter on file [emphasis added]; however, it is your responsibility to keep records of the number of shares redeemed or transferred on a specific date, and to report that information to the IRS. Your letter should include the following information:

-Your name, address and Social Security number
-The fund and account number from which you are redeeming or transferring shares
-The share amount to be redeemed or transferred
-The specific date on which the shares were originally purchased

You can mail your requests to the following address:

Vanguard
P.O. Box 1120
Valley Forge PA 19482-1120

Additionally, once you start using a certain tax reporting method for a portfolio or fund account, you must continue to use that method for the life of the account, unless you receive written notification from the IRS. Therefore, any Average Cost information you receive from Vanguard should be disregarded.

Topic Author
johndcraig

Post by johndcraig » Wed Jul 18, 2007 4:48 pm

Lowwall

I spoke with Vanguard Compliance at length about these issues this morning. They started by giving me the same story as in your email. Since their position seems to make no sense, maybe some progress will be made as a result of this morning’s phone call and sample emails (though I’m not holding my breath). As you note, the key matters are whether they will retain email notification, and confirm the content of the email in some written manner (email or letter). I expect to have an additional phone conversation with the individual in V Compliance, and I’ll post developments here.

John

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Good luck

Post by edge » Wed Jul 18, 2007 5:32 pm

A more elegant system for specific share identification is required. Someone at Vanguard should sign up for a Fidelity account to see how they do it.

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Post by stebul » Wed Jul 18, 2007 5:33 pm

Seems like a mark in the plus column for holding ETFs instead of Vanguard funds. A big hassle.

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Re: Good luck

Post by tarkbud » Wed Jul 18, 2007 6:47 pm

edge wrote:A more elegant system for specific share identification is required. Someone at Vanguard should sign up for a Fidelity account to see how they do it.
When you place a sell order (online) you select the specific lots you want to sell right then if you choose to use that method.

Sandy

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Re: Good luck

Post by edge » Wed Jul 18, 2007 7:15 pm

tarkbud wrote:
edge wrote:A more elegant system for specific share identification is required. Someone at Vanguard should sign up for a Fidelity account to see how they do it.
When you place a sell order (online) you select the specific lots you want to sell right then if you choose to use that method.

Sandy
Yes, I am aware of that, since I have a Fidelity account. The point is not for me to understand the difference in functionality, it is for Vanguard.

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Post by Mel Lindauer » Wed Jul 18, 2007 7:17 pm

stebul wrote:Seems like a mark in the plus column for holding ETFs instead of Vanguard funds. A big hassle.
Not sure if that would make any difference if you used VBS for your ETF purchases/sales (Flagship clients get 12 free trades per year).

Regards,

Mel

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Post by stebul » Wed Jul 18, 2007 7:39 pm

Mel Lindauer wrote:
stebul wrote:Seems like a mark in the plus column for holding ETFs instead of Vanguard funds. A big hassle.
Not sure if that would make any difference if you used VBS for your ETF purchases/sales (Flagship clients get 12 free trades per year).

Regards,

Mel
VBS now offers the choice of HIFO (highest in, first out) cost basis accounting. That works for me since I would generally want to sell the highest cost holdings to harvest losses. Yes, there are commissions, but there is some value to avoiding the inconvenience of back and forth communication with Vanguard, reps who don't understand the process, and in the end sending instructions by US Mail.

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Post by alvinsch » Wed Jul 18, 2007 7:53 pm

stebul wrote:
Mel Lindauer wrote:
stebul wrote:Seems like a mark in the plus column for holding ETFs instead of Vanguard funds. A big hassle.
Not sure if that would make any difference if you used VBS for your ETF purchases/sales (Flagship clients get 12 free trades per year).

Regards,

Mel
VBS now offers the choice of HIFO (highest in, first out) cost basis accounting. That works for me since I would generally want to sell the highest cost holdings to harvest losses. Yes, there are commissions, but there is some value to avoiding the inconvenience of back and forth communication with Vanguard, reps who don't understand the process, and in the end sending instructions by US Mail.
I looked at VBS's HIFO earlier this year (there was a thread in February I think), but didn't get around to using it as I had some unanswered questions. If one converts existing Vanguard fund shares to ETF class shares with VBS one ends up with fractional shares. Does anyone know if the VBS HIFO system will allow one to enter fractional shares given they don't seem to allow one to sell fractional shares? If not, then it wouldn't seem to be a solution for those of us who have converted shares, purchases with round dollar amounts (i.e. fractional shares).

Thanks
- Al

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Post by Doc » Wed Jul 18, 2007 8:37 pm

Al wrote:
If not, then it wouldn't seem to be a solution for those of us who have converted shares, purchases with round dollar amounts
The IRS doesn't seem to worry whether you have the documentation for the specific share sale even if it is in the regs. Do you think they are going to care if you have the wrong cost on a fractional share? :twisted:

I think the only time you are going to have a problem is if you try to sell that same highly priced lot six or seven times in a row. :D
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Re: Good luck

Post by tarkbud » Wed Jul 18, 2007 8:55 pm

edge wrote:
tarkbud wrote:
edge wrote:A more elegant system for specific share identification is required. Someone at Vanguard should sign up for a Fidelity account to see how they do it.
When you place a sell order (online) you select the specific lots you want to sell right then if you choose to use that method.

Sandy
Yes, I am aware of that, since I have a Fidelity account. The point is not for me to understand the difference in functionality, it is for Vanguard.
edge--sorry, I misunderstood your point.

Sandy

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hi

Post by edge » Wed Jul 18, 2007 10:29 pm

No apology needed.

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Post by goosecat » Thu Jul 19, 2007 10:37 am

stebul wrote:
VBS now offers the choice of HIFO (highest in, first out) cost basis accounting. That works for me since I would generally want to sell the highest cost holdings to harvest losses. Yes, there are commissions, but there is some value to avoiding the inconvenience of back and forth communication with Vanguard, reps who don't understand the process, and in the end sending instructions by US Mail.
How do you choose HIFO on VBS? I looked around and couldn't find anything.

Topic Author
johndcraig

Post by johndcraig » Thu Jul 19, 2007 3:13 pm

Call from Vanguard

I did get a call back from Vanguard Compliance yesterday evening. I should start by saying that the individuals that I spoke with were very competent and professional. Having said that, Vanguard has a serious problem in this area, IMO.

Whoever is setting the policy for specific identification is doing a real disservice to Vanguard's customers. The policy for brokerage is totally different than that for V mutual funds. This means that if brokerage is right regarding their policy then mutual funds policy must be inadequate. If mutual fund’s policy is right, then brokerage’s policy is excessive. As many of the above posts indicate, the advice given by the representatives varies considerably, and follow up on requests has been inconsistent at best.

I think one of the biggest problems that arises is that many of Vanguard’s actions and publications serve to dissuade people from using specific identification. Because of the resulting hassle and confusion, customers give up on specific identification and go to average cost, and that can be very costly. Personally I am not that concerned about IRS problems, regardless of the positions taken. Minimal action on the part of Vanguard may be all that is needed in order to satisfy the IRS. Instead Vanguard has a hodgepodge of policies that are inconsistently applied and are overly complex for its customers.

Vanguard, it is time for an intelligent review of overall policies for brokerage and mutual funds. You are presently doing a major disservice to your customers.

John

Topic Author
johndcraig

Post by johndcraig » Fri Jul 20, 2007 4:40 pm

Help please

Does anyone know how to bring the above post to the attention of the upper echelon at Vanguard? This is an important matter for all who use Vanguard mutual fund or brokerage services.

I'd also be interested in the views of anyone who thinks I may have misstated or overstated the present situation.

John

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Post by Mel Lindauer » Fri Jul 20, 2007 5:17 pm

johndcraig wrote:Help please

Does anyone know how to bring the above post to the attention of the upper echelon at Vanguard? This is an important matter for all who use Vanguard mutual fund or brokerage services.

I'd also be interested in the views of anyone who thinks I may have misstated or overstated the present situation.

John
Hi John:

You can always provide a link to this conversation in an e-mail, or write to John Brennan personally and share your thoughts.

Regards,
Mel

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Re:

Post by cudaman » Fri Jul 20, 2007 6:35 pm

John - I don't think you've misstated or overstated the situation. I've seen quite a few threads addressing this issue and it never seems to be clear.

Some people seem to have figured out a method, VG "sometimes" acknowledges, others simply track themselves, etc... IRS Pub 564 clearly states (1) you must specify specific shares at the time of the sale or transfer, and (2) you must receive confirmation in writing within a reasonable time.

VG needs to publish an official policy to allow compliance with IRS Pub 564. The policy should clearly state what the investor needs to do to comply with (1) and what VG will do to comply with (2). The IRS publication is clear, VG is not. That appears to be the current situation, plain and simple.

Topic Author
johndcraig

Post by johndcraig » Fri Jul 20, 2007 7:02 pm

Thanks Mel

Do you have email addresses that will get to the appropriate people?

John

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Post by ditsteve » Fri Jul 20, 2007 7:27 pm

This thread has had some of the most useful information I have ever read on the forum. I highly believe that this thread needs to be preserved and highly visible (perhaps as a sticky). Maybe it should go in the library under a subheading of "Investing Mechanics"?
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Post by Mel Lindauer » Fri Jul 20, 2007 7:51 pm

johndcraig wrote:Thanks Mel

Do you have email addresses that will get to the appropriate people?

John
Hi John:

I honestly don't think an e-mail will be nearly as effective as a letter addressed to John Brennan or someone else at Vanguard. However, if you still want to use e-mail, the e-mail format at Vanguard would be firstname_middleinitial_lastname@vanguard.com (those are underlines between the units). It may well bounce back or end up in the receiver's junk mail/SPAM folder though, since most e-mail filters only allow e-mail through from those who are in the receiver's address book.

Regards,

Mel

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Specific share ID

Post by prh2s » Fri Jul 20, 2007 11:22 pm

Agreed that given how much Vanguard touts tax-savvy investing, they should make it easier for clients to make tax-smart sales of mutual fund shares.

I asked about the VBS cost basis accounting service on this forum several months ago. Clearly, the service helps investors keep track of cost basis, but it isn't clear whether the records VBS generates, either at the time of sale or later, would satisfy the IRS's specification and confirmation requirements. The key issue, to my mind, is what sort of follow-up documentation one gets from VBS. Do transaction confirmations and/or account statements indicate that specific share lots were sold? (Of course there's also the question of whether a one-time election to have all future sell orders executed on a HIFO basis would satisfy the specification requirement. It seems to me that it should, but so far as I know there's no authority on point.)

Patrick

Edit: I just noticed a (fairly) recent article about specific share identification on Fairmark. Kaye Thomas is sensible, as always.

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Re: Specific share ID

Post by Alex Frakt » Sat Jul 21, 2007 11:50 am

prh2s wrote: I just noticed a (fairly) recent article about specific share identification on Fairmark. Kaye Thomas is sensible, as always.
This article http://www.fairmark.com/capgain/ident.htm is more to the point.
The second requirement is that you receive written confirmation of the identification from the broker within a reasonable time after the transaction. Remember, they're merely confirming your message. They don't have to confirm that they actually sold those specific shares. All you need is written confirmation that you identified the stock at the time of the sale....

Q: Is an email confirmation from my broker good enough?

A: There's no official guidance on whether this constitutes a written document for this purpose, but given the strict requirements for brokers to maintain records of email communications it should be acceptable.

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Will become more important later

Post by edge » Sat Jul 21, 2007 1:19 pm

This is an important gap in VGs offering, it would be good if there was some positive resolution to this - maybe a "next release" type thing.

VG doesn't even seem to be required to track the specific shares, they just have to have a procedure for sending confirmations of sale. I don't see whats so hard about that.

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Post by johndcraig » Sun Jul 22, 2007 3:06 pm

Lowwall and Mel

If you both agree with Lowwall’s last post and my earlier post, then someone needs to bring this to the attention of the right people at Vanguard. Mel is right that cold emailing will get nowhere, but neither will cold written letters. What is needed is using whatever clout and/or connections these forums may have for getting directly to the decision makers. Hopefully you two can figure out a way to do this. Maybe Taylor can work through Jack Bogle?

I believe that this, http://www.diehards.org/forum/viewtopic ... 2501#52501 is the right analysis and this, http://www.diehards.org/forum/viewtopic ... 2085#52085 is all that is needed to solve the problem. I think Lowwall is on the same page. I would be happy to join the discussion if the right contacts can be made.

John

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Post by Mel Lindauer » Sun Jul 22, 2007 3:15 pm

johndcraig wrote:Maybe Taylor can work through Jack Bogle?

John
Jack Bogle is no longer involved in the management or operation of Vanguard.

Regards,

Mel

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Post by cudaman » Sun Jul 22, 2007 3:48 pm

Mel - Can you envision a path to having VG publish a policy on specific share ID? You've probably already suggested all you can here and your views are appreciated. Maybe it's for everyone to work out on their own but it seems strange VG would not recognize that investors worry about compliance with IRS rules. The primary problem appears to be VG confirmation in writing as I guess we can all write letters to VG assuming that's what they require.

I'm not sure VG recognizes the confusion the lack of a clear policy creates. Maybe this forum has no solution and everyone will continue to be on their own, I don't know. I remember a year or so ago I completed a VG survey on suggested improvements to their website and my #1 comment was to allow specific share ID online. I assumed and continue to think this is all I can do.

I was hoping John's post would somehow lead to a resolution of this issue. It has not yet affected me as I've never sold less than an entire fund balance in a taxable account but the day I do I know I'll be faced with this issue.

Thanks Mel.

Regards
Jerry

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Post by Mel Lindauer » Sun Jul 22, 2007 5:47 pm

cudaman wrote:Mel - Can you envision a path to having VG publish a policy on specific share ID? You've probably already suggested all you can here and your views are appreciated. Maybe it's for everyone to work out on their own but it seems strange VG would not recognize that investors worry about compliance with IRS rules. The primary problem appears to be VG confirmation in writing as I guess we can all write letters to VG assuming that's what they require.

I'm not sure VG recognizes the confusion the lack of a clear policy creates. Maybe this forum has no solution and everyone will continue to be on their own, I don't know. I remember a year or so ago I completed a VG survey on suggested improvements to their website and my #1 comment was to allow specific share ID online. I assumed and continue to think this is all I can do.

I was hoping John's post would somehow lead to a resolution of this issue. It has not yet affected me as I've never sold less than an entire fund balance in a taxable account but the day I do I know I'll be faced with this issue.

Thanks Mel.

Regards
Jerry
Hi Jerry:

While I think it would be nice if this wasn't a perceived problem and Vanguard had an established policy on this, I don't realy think it's a big issue. I've never had any problems getting Vanguard to stamp my letter and return a copy (they keep the original), and I don't know a single soul who's ever been challenged by the IRS on this issue. I just can't see expending a lot of political capital on something that doesn't seem to have any negative documented consequenses.

However, as I suggested to John, perhaps he should write a letter to John Brennan, possibly enclosing a printout of this conversation, and it just might do the job. I don't feel that it's Vanguard's policy to ignore legitimate customer complaints/suggestions.

Regards,

Mel

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johndcraig

Post by johndcraig » Tue Jul 24, 2007 8:40 am

End of Road
I just can't see expending a lot of political capital on something that doesn't seem to have any negative documented consequenses.
Apparently the following is not considered to be negative consequences:
I think one of the biggest problems that arises is that many of Vanguard’s actions and publications serve to dissuade people from using specific identification. Because of the resulting hassle and confusion, customers give up on specific identification and go to average cost, and that can be very costly. Personally I am not that concerned about IRS problems, regardless of the positions taken. Minimal action on the part of Vanguard may be all that is needed in order to satisfy the IRS. Instead Vanguard has a hodgepodge of policies that are inconsistently applied and are overly complex for its customers.
Since no political capital will be spent, it appears there is nothing else to do.

John

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Post by whitemiata » Wed Jul 25, 2007 1:13 pm

Don't know if this will help anyone or not, but I created two Word templates (one for exchanges and one for outright sales) for me to use whenever I need to send after-the-fact instructions to Vanguard (for specific share identification).

You can download a zip file with the templates here: http://bellsouthpwp2.net/d/i/disciascio ... plates.zip

Note that both templates are protected so that when you type you only fill out the appropriate fields. There is NO PASSWORD required for removing protection and doing whatever you wish.

No Macros or anything like that either.


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Specific Identification with ETF's

Post by LFT_PFT » Fri Jan 18, 2008 5:24 pm

In the spirit of the recent surge in tax loss harvesting postings (wonder why that is?)....

Does one need to communicate in writing (with specific shares ID'd) about selling an ETF in order to use specific identification?

It is not clear to me from this thread and the fairmark link whether the written communication and confirmation applies to ETF's or just mutual funds.

Any insight is much appreciated. Thanks.

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