TLH

[buddtholomew]

Tax loss harvested VTI for SPY this afternoon. Had a combination of short-term and long-term gains in PRPFX to offset before year's end.

[moda0306]

Nice work.

What are you going to do now?  Wait the month or invest in something slightly different?

[buddtholomew]

Nice work.

What are you going to do now?  Wait the month or invest in something slightly different?

Thanks. I sold VTI and bought SPY this afternoon. The plan is to repurchase VTI on 11/4. For some reason, TLH was more difficult than I expected. Something inherently challenging with selling equities at a loss.

[moda0306]

bud,

I agree with that move.  I see it as extremely unlikely that the IRS goes on an audit spree trying to parce through the wash-sale rule.

There's just not much money in it. If the ordinary deduction limity was higher than $3,000, maybe there'd be some ROI, but if all they can get is $1,050 max out of someone, AND they have to argue that SPY & VTI are the same, which there is little precedent for, they are probably going to simply leave the issue alone.

If I DID get audited, I'd probably use the argument that "SPY was looking too tax-inefficient for you, and VTI was an inexpensive way to increase exposure to small & mid-cap stocks, which are a bargain right now with low dividend rates."

Between all the reasons above, I see no reason to worry.  The IRS is unlikely to make you their Wash-sale guinnea pig for a grand worth of tax revenue.

[steve]

If the market keeps going south I may do the same. I am also considering a switch to VOO. SPY has more volume then VOO (vanguards s&p500) but VOO has lower expense and no commision,
SPY  Annual Report Expense Ratio (net) 0.09%
VOO  Annual Report Expense Ratio (net) 0.06%
The last time I did a tax loss harvest (TLT) Long term treasuries turned on a dime, what I switched too just went up and up (EDV/VGLT) and I never got a chance to rebuy TLT. Not that this means anything but today EDV is up more then 71% from when I bought it and VGLT is up more then 32%. Just saying sometimes it is not that easy to switch back.

[buddtholomew]

bud,

I agree with that move.  I see it as extremely unlikely that the IRS goes on an audit spree trying to parce through the wash-sale rule.

There's just not much money in it. If the ordinary deduction limity was higher than $3,000, maybe there'd be some ROI, but if all they can get is $1,050 max out of someone, AND they have to argue that SPY & VTI are the same, which there is little precedent for, they are probably going to simply leave the issue alone.

If I DID get audited, I'd probably use the argument that "SPY was looking too tax-inefficient for you, and VTI was an inexpensive way to increase exposure to small & mid-cap stocks, which are a bargain right now with low dividend rates."

Between all the reasons above, I see no reason to worry.  The IRS is unlikely to make you their Wash-sale guinnea pig for a grand worth of tax revenue.

Interesting. I didn't think that a switch from VTI to SPY would violate the wash sale rule. VTI holds LC, MC and SC, whereas SPY is dominated by LC holdings.

[moda0306]

It's still up for debate, due to the common holdings between the two... it's a very untested area of the tax code.

[MediumTex]

It's still up for debate, due to the common holdings between the two... it's a very untested area of the tax code.

"Form over substance" is what the IRS would probably say.

[buddtholomew]

I harvested losses in VTI and then hesitated for a brief moment before re-investing the proceeds in SPY. Had I waited the 30 days to avoid the wash sale rule, I would have given up 5.32% in gains from this Tuesday through close of market today (3-days). Just sharing an experience where I was able to offset gains with losses and then realize a gain in the replacement investment. Everything could have turned out differently, but taking the loss was the right thing to do even if the market continued to fall.

Best-
Budd