Wash sale rule

[fanfare]

@tagteam 

I am sure you will see if Vanguard is recording a "Wash Sale".

Whether Vanguard follows the rules for identical shares purchased in a tax-deferred account is another matter with which I have no direct experience..

If Vanguard does not, It is up to the taxpayer to decide the next step,

Whether the two securities are considered identical is yet another matter.

If wash sale is indicated, you know the answer is Yes.

If wash sale is not indicated the answer is not determined just from the report due to the complication you mention.

[tagteam]

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@fanfare wrote:

Whether the two securities are considered identical is yet another matter.

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If you bothered to look at the fund list (at the link I posted earlier) you will see that Vanguard considers the two securities to be substantially identical for the purposes of avoiding the wash sale rule.

[fanfare]

But Vanguard is saying they are not substantially identical for IRS purposes and will be replacing your monthly purchase order in any period you sell for a loss.

Treatment in the case of different accounts (IRA and regular account) still has to be checked by looking at the detail report.

[Mike9241]

@fanfare it would have been nice for Vanguard to point to what source it is using for its conclusion.  Years ago lawyers, CPAs. etc were saying that certain tax shelters would prevail if the IRS challenged them. they even issued letters "attesting" to that (more likely than not) which were included in the offering memorandums. The IRS went to court over them. The court gave a complete victory to the IRS which led to lawsuits against many firms. This is one reason why Arthur Anderson is no longer around.  

[tagteam]

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@fanfare wrote:

But Vanguard is saying they are not substantially identical for IRS purposes and will be replacing your monthly purchase order in any period you sell for a loss.

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In fact, you read that entirely wrong. The two SP500 Index funds are in the same column because Vanguard does consider them to be substantially identical. If it were otherwise, they would have suggested swapping one for the other.

As has already been mentioned, the IRS has the final word on the matter, in any event.

[fanfare]

 I am not reading down, I am reading across.

I am contrasting Surrogate Fund/ETF  versus Current Mutual Fund/ETF, which is the purpose of the Table.

Surrogate ETF  or fund replaces Current Mutual Funds/ETF.

There would be no point choosing a replacement that is substantially identical.

Even if you read down, it doesn't mean two funds in the same table entry are "substantially identical",

only that one of the Surrogates  in that row applies.

[tagteam]

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@fanfare wrote:

Even if you read down, it doesn't mean two funds in the same table entry are "substantially identical",

only that one of the Surrogates  in that row applies.

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Using simple logic, if Vanguard did not consider VFIAX and VOO substantially identical, they would have listed one of them as a surrogate for the other and not in the same column.

[fanfare]

I have Vanguard accounts and a similar event happened to me, but in the opposite direction, and only one account was involved.

There was no chance for the "AI" to try to save me, even if there were a Surrogate fund matched with my fund.

If you do a detail "realized gain/loss" report you will know whether you're being tagged with a wash sale.

Noticing that your monthly purchase was in a different fund would also be informative..

@mas1998 

[tagteam]

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@fanfare wrote:

I have Vanguard accounts and a similar event happened to me, but in the opposite direction, and only one account was involved.

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It seems as if that would be key here; these are two separate accounts, one of which is a retirement account.