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TLH
Posted: Mon Oct 03, 2011 2:24 pm
by 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.
Re: TLH
Posted: Mon Oct 03, 2011 2:25 pm
by moda0306
Nice work.
What are you going to do now? Wait the month or invest in something slightly different?
Re: TLH
Posted: Mon Oct 03, 2011 2:40 pm
by buddtholomew
moda0306 wrote:
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.
Re: TLH
Posted: Mon Oct 03, 2011 2:50 pm
by 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.
Re: TLH
Posted: Mon Oct 03, 2011 3:00 pm
by 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.
Re: TLH
Posted: Mon Oct 03, 2011 3:12 pm
by buddtholomew
moda0306 wrote:
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.
Re: TLH
Posted: Mon Oct 03, 2011 3:15 pm
by 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.
Re: TLH
Posted: Mon Oct 03, 2011 4:53 pm
by MediumTex
moda0306 wrote:
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.
Re: TLH
Posted: Thu Oct 06, 2011 3:35 pm
by 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