IMO, instead of being more careful, you should have ignored it. I am all for following the letter and the spirit of the law, however...
So not only are the rules complex, but they are imprecise and subjective. I'll use the 'reasonable man' defense here. If the IRS themselves cannot tell me what "substantially identical" is, then why should a taxpayer who is just trying to use the retirement tools that the govt offers (not a pro trading stocks for a living), be held accountable for following these rules? I don't think they should.
I'm pretty sure I've done this kind of thing a time or two. Yes, I could have bought a slightly different index, and then traded back later or something. I just don't think the govt should be putting that kind of burden of compliance on people.
So what if it truly was a wash? What are the odds that I would get audited, that they would look at that transaction, that they would put it together and catch it?That *they* would even *know* what to do with the transaction? And what are the odds I'd actually owe anything overall (washes push the gain forward anyhow, depending on my tax situation that year, it might be better taking the gain then anyhow). And since it can be avoided by a different trade on my part, it's is not like I'm keeping any extra revenue from the IRS, so I have no guilt feelings, I just chose not to take the extra step to avoid it.
Let 'em catch me on stuff like that. I've had enough with jumping through their flaming hoops, on one leg.
-ERD50