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Wash sale rules for SPY vs VTI
12-08-2008, 09:25 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Aug 2006
Posts: 1,558
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Wash sale rules for SPY vs VTI
Does anyone know whether it would be ok to sell SPY to buy VTI and take the tax loss?
Or are these funds too close to each other to avoid the wash rules?
Thanks.
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12-08-2008, 09:31 AM
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#2
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Recycles dryer sheets
Join Date: Sep 2006
Posts: 312
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The general wisdom is that this is perfectly fine.
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12-08-2008, 09:32 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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I would think that's okay since a "total market" index isn't the same as a large cap stock index and would thus avoid the "substantially identical" test.
If you replace one S&P 500 index fund with another S&P 500 index fund, that would likely fail the smell test.
(Not a tax lawyer or CPA.)
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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12-08-2008, 10:15 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,455
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It should be okay.
I am thinking about selling VTI, along with 9 other funds, and buy VT.
__________________
May we live in peace and harmony and be free from all human sufferings.
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12-08-2008, 12:39 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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First, there are no rules. The IRS has not ruled on this. There are only interpretations of IRS wording.
That written, I recently sold SPY and bought VTI in a tax-loss harvesting move. In my opinion, there will be no wash sale as these ETFs appear to not meet the "substantially identical" terminology of the IRS in my opinion.
Thus, in the end, you have to make up your own opinion.
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12-08-2008, 01:18 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2007
Posts: 14,328
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I'm skeptical that these wash sale laws are even enforced unless you are unlucky enough to offend someone in the IRS.
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12-08-2008, 01:24 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by travelover
I'm skeptical that these wash sale laws are even enforced unless you are unlucky enough to offend someone in the IRS.
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It's like anything: given the small percentage of returns that are audited, a lot of tax laws are rarely enforced unless it's something the computer picks up about your return that's clearly wrong.
Still I wouldn't want to explain in an audit that selling SPY and immediately buying VFINX wasn't a wash sale...
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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12-08-2008, 02:44 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2007
Posts: 14,328
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Quote:
Originally Posted by ziggy29
It's like anything: given the small percentage of returns that are audited, a lot of tax laws are rarely enforced unless it's something the computer picks up about your return that's clearly wrong.
Still I wouldn't want to explain in an audit that selling SPY and immediately buying VFINX wasn't a wash sale...
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Perhaps, but I think a lot of the hand wringing here and at the Bogleheads' forum is a wasted effort. The average IRS agent probably doesn't even know the difference between an index fund and a managed fund, let alone the fine points of asset allocation.
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12-09-2008, 04:27 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 4,337
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I sold SPY and IWD for a $60K loss and moved all the money into VTI. I think it was within the letter and spirit of the law. I also don't think they will care unless it was for the equivalent index fund with another name on it.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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