|
10-18-2006, 10:58 AM
|
#1
|
Thinks s/he gets paid by the post
Join Date: Dec 2003
Posts: 4,459
|
Tax Loss Harvesting
It's that time of year again. This is when I try to get a handle on my tax liability and try to tweak it downward.
I plan to sell a couple of dogs with unrealized losses to offset some realized capital gains. I've got a question about the wash rule. Does the wash rule kick in if I sell, say, a small-cap fund and then use the proceeds to buy a different small-cap fund, or does it only apply if the securities are identical?
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
10-18-2006, 11:02 AM
|
#2
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,186
|
Re: Tax Loss Harvesting
Quote:
Originally Posted by wab
Does the wash rule kick in if I sell, say, a small-cap fund and then use the proceeds to buy a different small-cap fund,
|
No
Quote:
or does it only apply if the securities are identical?
|
Yes
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
|
|
|
10-18-2006, 11:04 AM
|
#3
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
|
Re: Tax Loss Harvesting
No, I even think you can sell IWM and buy IWN because, while there is overlap in the stocks they own, they are not "substantially identical".
One can even sell VFINX and buy SPY or vice versa.
But may I ask why you have a loss in a small cap fund? I want to avoid that particular fund because small caps have done rather well.
|
|
|
10-18-2006, 11:08 AM
|
#4
|
Thinks s/he gets paid by the post
Join Date: Aug 2005
Posts: 1,375
|
Re: Tax Loss Harvesting
My problem is that I rarely have losses these days ('course that could change if the bears are right this time). Nice problem
__________________
You can't always get what you want, but if you try sometimes, you might find you get what you need.
|
|
|
10-18-2006, 11:09 AM
|
#5
|
Thinks s/he gets paid by the post
Join Date: Dec 2003
Posts: 4,459
|
Re: Tax Loss Harvesting
Quote:
Originally Posted by LOL!
One can even sell VFINX and buy SPY or vice versa.
|
Really? I would have expected close to 100% overlap would trigger "substantially identical."
Quote:
But may I ask why you have a loss in a small cap fund? I want to avoid that particular fund because small caps have done rather well.
|
It was just used for example. I'm actually kind of bummed that I have almost no unrealized losses this year. Only some small capital losses in two bond funds.
|
|
|
10-18-2006, 11:12 AM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
|
Re: Tax Loss Harvesting
Quote:
Originally Posted by astromeria
My problem is that I rarely have losses these days...
|
Quote:
Originally Posted by wab
...I'm actually kind of bummed that I have almost no unrealized losses this year. Only some small capital losses in two bond funds.
|
If these two posts don't mark the start of a downturn, then you don't understand the definition of the work jinx.
__________________
Numbers is hard
|
|
|
10-18-2006, 11:38 AM
|
#7
|
Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
|
Re: Tax Loss Harvesting
Quote:
Originally Posted by wab
Really? I would have expected close to 100% overlap would trigger "substantially identical."
|
C'mon, you've been a Windows user for years, right? You should know better than to apply logic to IRS interpretations.
You may be right about the overlap, but there are very few instances of the IRS challenging investor's wash sales. It appears to be perfectly acceptable to sell a mutual fund and invest in an ETF of the same general class. So for now you rate what you get away with, but I think the best guidance is to not be greedy. If you're not comfortable doing something then you probably shouldn't do it.
__________________
*
Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
|
|
|
10-18-2006, 01:43 PM
|
#8
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
|
Re: Tax Loss Harvesting
Quote:
Originally Posted by LOL!
No, I even think you can sell IWM and buy IWN because, while there is overlap in the stocks they own, they are not "substantially identical".
One can even sell VFINX and buy SPY or vice versa.
But may I ask why you have a loss in a small cap fund? I want to avoid that particular fund because small caps have done rather well.
|
There's a waiting period to consider...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|