14 June 2022 18:20

Why is VTI a wash sale, but VV is not?

Why are wash sales not allowed?

The wash-sale rule prohibits selling an investment for a loss and replacing it with the same or a “substantially identical” investment 30 days before or after the sale. If you do have a wash sale, the IRS will not allow you to write off the investment loss which could make your taxes for the year higher than you hoped.

Are VTI and VOO substantially identical?

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

Does the wash rule apply to ETF?

Q: Do the wash sale rules apply to ETFs, mutual funds and options? Yes, if the security has a CUSIP number, then it’s subject to wash-sale rules. In addition, selling a stock at a loss and then buying an option on that same stock will trigger the wash-sale rule.

How do I bypass 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.

Are wash sale losses gone forever?

The tax benefit of your capital loss isn’t gone forever, but it’s deferred. The loss on the original investment will be taken into account when you sell your replacement shares by applying the losses to your adjusted cost basis.

Does Robinhood keep track of wash sales?

You can find your total wash sales for the year in Box 1G on your 1099 tax document. Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC).

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.

What counts as substantially similar wash sale?

The tax law does not define substantially identical security, but it’s clear that buying and selling the same security meets the definition. For example, if you sell shares in the XYZ ETF at a loss and buy it back within the wash sale period, you cannot take the loss now.

How do I avoid capital gains tax on my ETF?

One common strategy is to close out positions that have losses before their one-year anniversary. You then keep positions that have gains for more than one year. This way, your gains receive long-term capital gains treatment, lowering your tax liability. Of course, this applies for stocks as well as ETFs.

How can wash sale hurt you?


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Can you get in trouble for wash sale?

What Happens if You Trigger the Wash Sale Rule? It should be made clear that it is not illegal to make a wash sale. It is, however, illegal to claim an improper tax benefit. Triggering the wash sale rule does not mean you lose all potential value in losing money.

Do you have to pay taxes on wash sales?

If you have a loss from a wash sale, you can’t deduct the loss on your return. However, a gain on a wash sale is taxable.

Are wash sales a big deal?

Investors looking to write off any capital losses need to beware of wash sales, which can derail their attempt to claim a deduction during tax time. A wash sale is one of the key pitfalls to avoid when trying to take advantage of tax-loss harvesting to reduce your taxes.

Does TurboTax calculate wash sales?

Yes, if the wash sales are entered correctly TurboTax will calculate then correctly.

Can you sell a stock for a gain and then buy it back?

You can Sell a Stock for Profit



This is, as mentioned earlier, a capital gains tax. You can buy the same stock back at any time, and this has no bearing on the sale you have made for profit. Rules only dictate that you pay taxes on any profit you make from assets.

Is it legal to buy and sell the same stock repeatedly?

As a retail investor, you can’t buy and sell the same stock more than four times within a five-business-day period. Anyone who exceeds this violates the pattern day trader rule, which is reserved for individuals who are classified by their brokers are day traders and can be restricted from conducting any trades.

What is the 3 day rule in stocks?

In short, the 3-day rule dictates that following a substantial drop in a stock’s share price — typically high single digits or more in terms of percent change — investors should wait 3 days to buy.

How long after selling stock can you buy again?

Stock Sold for a Profit



You can buy the shares back the next day if you want and it will not change the tax consequences of selling the shares. An investor can always sell stocks and buy them back at any time. The 60-day waiting period is imposed by the tax rules and only applies to stocks sold for a loss.

What is the penalty for a wash sale?

Wash Sale Penalty



A wash sale itself is not illegal. Claiming the tax loss on a wash sale is, however, illegal. The IRS does not care how many wash sales an investor makes during the year. On the other hand, it will disallow the losses on any sales made within 30 days before or after the purchase.

Is it a wash sale if I sell all shares?

You don’t have a wash sale unless the shares you bought “replace” the shares you sold. In general, the wash sale rule prevents you from reporting a loss on the sale of stock if you acquired substantially identical stock on the same day as the sale, or within 30 days before or after that day.

Does wash sale apply to gains?

The Wash Sale Rule does NOT apply to profits or gains of a sale. Only losses. Though you may incur losses, that loss is allowed to be applied to the future purchase of the shares to bring up your cost basis, regardless of the 30 day window.