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Bought within last 30 days -- can I TLH?

Posted: Wed Mar 11, 2020 11:38 pm
by BlueMoonXD
Hi there folks. I apologize for yet another TLH thread, but I want to make sure I understand correctly before I do anything.

Here's my situation, I regularly invest in SCHB and have lots ranging from 2016 to this week. I have purchased 2 lots in the last 30 days -- one was a regular investment, and the other was a bulk purchase after selling VXF shares that I had been stuck with since switching over from Wealthfront (the gains were now minimal, so I decided to eliminate my position).

I realized today that many of my SCHB lots are under water, and I'm interested in doing TLH. Is this possible in my situation or do I need to wait 30 days from my last purchase date?

If I sell the two lots purchased within the last 30 days + other lots which are older than 30 days old and currently below their cost-basis, and purchase replacement shares of VTI -- will I avoid triggering a wash sale?

Thanks in advance for the guidance!

Re: Bought within last 30 days -- can I TLH?

Posted: Thu Mar 12, 2020 12:33 am
by eye.surgeon
You have to wait 30 days from the last purchase, and can't buy it again for another 30 days.

Re: Bought within last 30 days -- can I TLH?

Posted: Thu Mar 12, 2020 12:57 am
by venkman
I'm not a tax person, so don't rely on my advice. But my understanding is that wash sale rules only apply to replacement shares purchased 30 days before or after the sale. If you sell your entire position and don't buy it back, there can't be a wash sale.

I believe VTI and SCHB track slightly different indexes, so you should be okay.

Re: Bought within last 30 days -- can I TLH?

Posted: Thu Mar 12, 2020 1:01 am
by BlueMoonXD
venkman wrote: Thu Mar 12, 2020 12:57 am I'm not a tax person, so don't rely on my advice. But my understanding is that wash sale rules only apply to replacement shares purchased 30 days before or after the sale. If you sell your entire position and don't buy it back, there can't be a wash sale.

I believe VTI and SCHB track slightly different indexes, so you should be okay.
What if I sell all my <30 days shares but only some of my total holdings? The lots that I've held since 2016 are up quite a bit and my overall position is still a net gain, so I can only TLH by selling some of the lots.

Re: Bought within last 30 days -- can I TLH?

Posted: Thu Mar 12, 2020 1:13 am
by venkman
BlueMoonXD wrote: Thu Mar 12, 2020 1:01 am What if I sell all my <30 days shares but only some of my total holdings? The lots that I've held since 2016 are up quite a bit and my overall position is still a net gain, so I can only TLH by selling some of the lots.
I think you'd be okay. I found an example that seems to be on point:
https://fairmark.com/investment-taxati ... ent-stock/
4: Old Shares

You have held 100 shares of XYZ for more than 30 days. You buy an additional 100 shares for $5,000. Less than 31 days later, you sell these shares (the new ones) for $4,000 (a $1,000 loss). You continue to hold the old shares.

There are no rulings that mention this situation. But the requirement for replacement stock should prevent the wash sale rule from applying here. The older shares shouldn’t be considered replacement shares for the newer ones.

Note that you have to use specific identification to sell the newer shares. Unless you follow this procedure, the tax law assumes you sold the older shares. If you have a loss on those shares, the wash sale rule applies.

Re: Bought within last 30 days -- can I TLH?

Posted: Thu Mar 12, 2020 12:27 pm
by BlueMoonXD
Thank you.

So just to confirm with folks here before I move forward. If I have the following lots (simplified):

SCHB:
Lot A - June 2016
Lot B - June 2017
Lot C - June 2018
Lot D - June 2019
Lot E - Mar 2020

If I sell Lots C, D, and E but not Lot A or B -- would I ensure that I avoided any wash sale rules?

Re: Bought within last 30 days -- can I TLH?

Posted: Thu Mar 12, 2020 12:32 pm
by H-Town
BlueMoonXD wrote: Thu Mar 12, 2020 12:27 pm Thank you.

So just to confirm with folks here before I move forward. If I have the following lots (simplified):

SCHB:
Lot A - June 2016
Lot B - June 2017
Lot C - June 2018
Lot D - June 2019
Lot E - Mar 2020

If I sell Lots C, D, and E but not Lot A or B -- would I ensure that I avoided any wash sale rules?
Correct. Be sure to turn off the auto reinvest dividends because you might still receive dividends from Lot A and B.