How to know if two ETFs are 'substantially identical' according to wash sale rules? - KamilTaylan.blog
25 June 2022 13:54

How to know if two ETFs are ‘substantially identical’ according to wash sale rules?

Do wash sale rules apply to similar ETFs?

ETFs can be used to avoid the wash sale rule while maintaining a similar investment holding. This is because ETFs typically are an index for a sector or other group of stocks and are not substantially identical to a single stock.

What is considered substantially identical for wash sale?

Substantially identical security is a phrase that comes from the tax explanation of the wash-sale rule. Generally, this can be avoided by purchasing similar stock or securities issued by a different corporation.

What does the IRS consider substantially identical?

The IRS included “ordinarily” in the description without any indication as to what that meant. This could be interpreted to mean that a substantial difference in management or a substantial amount of overlap in similar mutual funds could constitute a substantially identical position.

What is considered substantially similar?

Substantially similar means similar in importance, degree, amount, placement or extent.

Are ITOT and VTI substantially identical?

Here is an example; sell Vanguard Total Stock Market ETF (VTI) at a loss and buy iShares Core S&P Total U.S. Stock Market ETF (ITOT) to replace it. These are similar index funds but not substantially identical because the securities are issued by unrelated investment companies and track different US market indices.

Are VTI and VOO substantially identical?

Re: VOO/VTI Substantially Identical? No. They track different indexes and are therefore not substantially identical.

How do you get around the wash sale rule?

If you own an individual stock that experienced a loss, you can avoid a wash sale by making an additional purchase of the stock and then waiting 31 days to sell those shares that have a loss.

How do you count days for wash sale rule?

The wash sale period for any sale at a loss consists of 61 days: the day of the sale, the 30 days before the sale and the 30 days after the sale. (These are calendar days, not trading days.

How do day traders avoid wash sales?

To avoid this unpleasant situation, close the open position that has a large wash sale loss attached to it and do not trade this stock again for 31 days. Avoid trading the same security in your taxable and non-taxable IRA accounts.

Are options substantially identical?

What are “substantially identical” securities? This is basically a facts and circumstances determination. The purchase of another company’s stock in the same industry is not considered substantially identical. However, the purchase of a call on the same stock would be.

Does Fidelity track wash sales?


Quote: That's called a wash sale wash sales are not uncommon. But it is important that you're aware of irs wash sale rules. For example if you sell a stock at a loss.

Which is better ITOT or VTI?

VTI is much more popular than ITOT. VTI has slightly more exposure to small- and mid-cap stocks, and has thus slightly outperformed ITOT historically.

Which is better Schb or VTI?

VTI holds more companies compared to SCHB.



SCHB is 29% technology which is the same as VTI. However, VTI has slightly more diversification due to its 3535 holdings compared to only 2551 with SCHB. Lastly, VTI and SCHB’s top 10 holdings make up 23% of their assets.

Which is better VOO or VTI?

Over very long periods of time, VTI can be expected to perform very similarly to VOO, but with higher volatility. Because 82% of VTI is VOO, its performance is still highly correlated to the S&P 500. The remaining 12% of mid- and small-cap stocks adds some volatility, which can boost returns but also increases risk.

Should I buy both QQQ and VOO?

If you want a single diversified investment that may not earn as much but carries less risk, VOO may be your best. On the other hand, if you’re willing to take on more risk for the chance at earning higher returns, QQQ could be a solid addition to your investments.

Should I have both VOO and VTI?

VTI is better than VOO because it offers more diversification and less volatility for the same expense ratio of 0.03%. VTI also provides exposure to large, mid, and small-cap companies compared to only large-cap with VOO.

Should I own VTI and VGT?

VTI is a better candidate to play the mean reversion trade, is more well-rounded, and is available at cheaper valuations. VGT has a solid track record of mitigating risk and delivering ample returns, whilst it also appears to have the requisite earnings and growth potential to justify its forward valuations.

Is VOO or VGT better?

VOO and VGT Differences



VOO vs VGT primarily differs in that VOO tracks the S&P 500. VGT tracks a higher growth index with companies in information technology. By tracking high-growth technology companies, VGT has been able to return a better performance but with higher volatility.

Is VGT better than VOO?

VGT has a higher 5-year return than VOO (18.83% vs 10.53%). VGT has a higher expense ratio than VOO (0.1% vs 0.03%). Below is the comparison between VGT and VOO.



VGT VOO
Dividend Yield 0.72% 1.43%
Underlying Index MSCI US Investable Market Information Technology 25/50 Index S&P 500
YTD Return -30.08% -22.33%

Which is better VUG or VGT?

The primary difference between VUG and VGT is their expense ratio. VUG has a low expense ratio of 0.04%. VGT has an expense ratio of 0.1%. VGT is 2.5 times more expensive!

What ETF is better than VUG?

ETF Benchmarks & Alternatives

Ticker Name 1Y Return
VUG Vanguard Growth ETF -20.68%
SPYG SPDR Portfolio S&P 500 Growth ETF -15.32%
SCHG Schwab U.S. Large-Cap Growth ETF -19.29%
MGK Vanguard Mega Cap Growth ETF -19.72%

What is the difference between QQQ and VUG?

The primary difference between QQQ and VUG is the company that offers the exchange-traded fund (ETF). VUG is offered by Vanguard while QQQ is offered by Invesco. Another significant difference is the number of stocks in each, with VUG having 287 different companies in the index compared to 100 with QQQ.