Wash sale rule question

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I file tax jointly, I have an investment account, Can I open open another investment account on my spouse's name is it good idea?, will it trigger any wash sale rules for same stock on my account and spouse' account ?
reason I am asking I may get some benefits on fees from the broker on new account opening.
 

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Wash sale rules only apply when you sell a position at a loss and then buy it back within 30 days.

And it is pretty specific. If you (for example) sell one brokerage's managed international equities mutual fund and buy another brokerage's managed international equities mutual fund, that's not a wash sale since even though the funds have similar objectives, they're managed by different fund managers. (By the same token, if you sell one brokerage's international equities index mutual fund and buy another brokerage's international equities index mutual fund, that is probably a wash sale, since the fund managers don't make a difference, and effectively the two mutual funds are substantially identical.)

Thank you, sorry my question was if I sell the stock in loss and wife buys the same stock within 30 days period will this trigger wash sale ? as mentioned I file tax jointly.

mk26 said:   Thank you, sorry my question was if I sell the stock in loss and wife buys the same stock within 30 days period will this trigger wash sale ? as mentioned I file tax jointly.
Yes, it's a wash sale.
https://www.irs.gov/pub/irs-pdf/p550.pdf - page 59 - "If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale."
Another option is to buy in your wife's account 30 days before you sell it in your account. That won't trigger the wash sale rule.

ETA: Yes, GordelianKnot - meant 31+ days.

BostonOne said:   
mk26 said:   Thank you, sorry my question was if I sell the stock in loss and wife buys the same stock within 30 days period will this trigger wash sale ? as mentioned I file tax jointly.
Yes, it's a wash sale.
https://www.irs.gov/pub/irs-pdf/p550.pdf - page 59 - "If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale."
Another option is to buy in your wife's account 30 days before you sell it in your account. That won't trigger the wash sale rule.

  Wash sale applies either 30 days before or after your sale, so that would trigger a wash sale as well.

Edit: You probably meant 31 days before (or after), in which case there'd be no wash.

bicker1 said:   And it is pretty specific. If you (for example) sell one brokerage's managed international equities mutual fund and buy another brokerage's managed international equities mutual fund, that's not a wash sale since even though the funds have similar objectives, they're managed by different fund managers. (By the same token, if you sell one brokerage's international equities index mutual fund and buy another brokerage's international equities index mutual fund, that is probably a wash sale, since the fund managers don't make a difference, and effectively the two mutual funds are substantially identical.)
  Substantially identical does not apply to index funds just because they try to track the same or similar indexes.  It's a very strict standard, and basically the only times different things might meet it are if

1) there's a pending stock merger between two stocks with no chance of failure, or

2) you buy different share class of the same underlying investment, ie the A shares of a mutual fund vs the C shares, or

3) the Vanguard ETF vs the corresponding Vanguard mutual fund (Vanguard has a weird structure where their ETFs are shares of the same investment pool as their mutual funds).  

In practice, if your broker doesn't flag it, the IRS isn't going to out of their way to either.  I'd be more worried about erroreous wash sales from your broker than this (I had one where a handful of buys were all cheaper than a handful of sales and somehow my broker flagged a wash sale when there was no loss!). 
 

mk26 said:   I file tax jointly, I have an investment account, Can I open open another investment account on my spouse's name is it good idea?, will it trigger any wash sale rules for same stock on my account and spouse' account ?
reason I am asking I may get some benefits on fees from the broker on new account opening.

  If a transaction in your brokerage account will trigger wash sale rule, that is not going to change by doing the same transaction in your spouse's brokerage account.

xerty said:   
bicker1 said:   And it is pretty specific. If you (for example) sell one brokerage's managed international equities mutual fund and buy another brokerage's managed international equities mutual fund, that's not a wash sale since even though the funds have similar objectives, they're managed by different fund managers. (By the same token, if you sell one brokerage's international equities index mutual fund and buy another brokerage's international equities index mutual fund, that is probably a wash sale, since the fund managers don't make a difference, and effectively the two mutual funds are substantially identical.)
  Substantially identical does not apply to index funds just because they try to track the same or similar indexes.  It's a very strict standard, and basically the only times different things might meet it are if 1) there's a pending merger between two stocks with no chance of failure, or 2) you buy different share class of the same underlying investment, ie the A shares of a mutual fund vs the C shares, or the Vanguard ETF vs the corresponding Vanguard mutual fund (Vanguard has a weird structure where their ETFs are shares of the same investment pool as their mutual funds).  

  Regarding two funds tracking the same index, there is no way to know if they are substantially similar since there is no IRS guidance on that issue.

https://www.bogleheads.org/wiki/Wash_sale
http://www.marketwatch.com/story/understanding-the-wash-sale-rul...

Yes, it "probably" is a wash sale, but not definitely a wash sale.

https://www.bogleheads.org/wiki/Wash_sale

mk26 said:   Thank you, sorry my question was if I sell the stock in loss and wife buys the same stock within 30 days period will this trigger wash sale ? as mentioned I file tax jointly.
  
Oh yes definitely.   Remember, from IRS perspective - all of these are under 1 account called "you & your wife".  They don't care really if its in Account A, B or under whose name.

Although i'm not sure how sophisticated IRS program is to check all cases of wash sales - not worth risking it.   Just wait the 30 days, or buy a similar stock.  Or make the sell & do the buy - but not write it as loss - you'll need to wait to show the loss on the stock.

 

bicker1 said:   Yes, it "probably" is a wash sale, but not definitely a wash sale.

https://www.bogleheads.org/wiki/Wash_sale

  That from a bunch of people who would tell you to not take a valid tax deduction if it vaguely offended their sensibilities and was written clear as day (I didn't see any tax experts cited).  They're recommending you assume the IRS will rule to your determent against a strict definition like this and without any precedent - sure it could happen, but i wouldn't assume it until they made an official ruling.  Congress could have written a super broad definition like they did for straddles, but they didn't and instead used this much stricter one so you've got to ask why Congress wrote it this way when you're trying to interpret what they meant.

​Do what you want, it's your money.  

I suppose the real question is what, other than buying a different fund class in the same mutual fund that you just sold constitutes a wash sale? And if it really was just buying a different fund class in the same mutual fund that you just sold, then why not state that explicitly? In other words, why word it generically unless it was to be applied generically.

Regardless, unless the IRS starts enforcing this it's truly academic, as you imply.

bicker1 said:   I suppose the real question is what, other than buying a different fund class in the same mutual fund that you just sold constitutes a wash sale?
  Buying and selling the same specific stock.  Selling a stock and buying an option on that stock.  Selling the option and buying the associated stock.

Selling one option and buying another option of identical expiration date and strike price.

*Selling one option and buying another option of same underlying but different expiration date or strike price has no ruling or guidance, so it's one where it's not defined and the broker won't flag it.  And probably not a wash sale but possibly could be considered one.

bicker1 said:   I suppose the real question is what, other than buying a different fund class in the same mutual fund that you just sold constitutes a wash sale? And if it really was just buying a different fund class in the same mutual fund that you just sold, then why not state that explicitly? In other words, why word it generically unless it was to be applied generically.

Regardless, unless the IRS starts enforcing this it's truly academic, as you imply.

  As an academic question, is VTI substantially similar to VTSAX?

They track the same index, hold the same assets, have the same expense ratio, they're from the same mutual fund provider -- in fact, they're identical in every way (since they're the actually the same fund) except VTSAX can be converted to VTI, but VTI can't be converted to VTSAX. Does that option make them not substantially similar?

stanolshefski said:     As an academic question, is VTI substantially similar to VTSAX?

They track the same index, hold the same assets, have the same expense ratio, they're from the same mutual fund provider -- in fact, they're identical in every way (since they're the actually the same fund) except VTSAX can be converted to VTI, but VTI can't be converted to VTSAX. Does that option make them not substantially similar?

  Good point about the conversion option, not sure but you could argue that's a right of the VTI shareholders that makes them different.  (Also, it's "substantially identical", not similar)



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