Comments on: Tax Loss Harvesting

By: Rich

Rich — Sat, 06 Dec 2008 19:47:06 +0000

Looks to me like the annual (usually in December) mutual fund capital gains distribution could be regarded as a purchase and result in a wash sale if it occurs within 30 days of a mutual fund sale made with the goal of tax loss harvesting. For example I have shares of an index mutual fund in both IRA and non-IRA accounts. If I sell my non-IRA account shares and retain those in the IRA (since there is no tax consequence of selling them at a loss), the capital gains distribution to the IRA account could result in the purchase of new shares that would be considered a wash sale.

By: jim

jim — Tue, 02 Dec 2008 21:05:37 +0000

That was just the example, you can have fees and such, they are just deducted as they normally are.

By: Miss M

Miss M — Tue, 02 Dec 2008 20:46:53 +0000

It looks like this only works for no load mutual funds or maybe if you use Zecco, in the scenario you show the difference is only $20. Commissions or trade costs would quickly eat through that.

By: jim

jim — Tue, 02 Dec 2008 13:30:16 +0000

Yes you could and the wash rule would only apply to the company. If you sold shares of Bank of America (BAC) you couldn’t buy shares within 30 days, but you could buy shares of Wells Fargo (WFC). The difficulty with individual stocks is that it’s difficult to find something that other option you can put the money in for 30-31 days. With mutual funds, you can swap one fund for another fund more easily.

By: Cameron

Cameron — Tue, 02 Dec 2008 13:15:56 +0000

Can you do this with an individual stock? And if Yes what would constitude similar in this case do you thing? The sector the stock is in?