Did I mess up my first TLH attempt?

[Phoenixdown99]

I just sold 100% of my VTSAX shares (803.72) to VLCAX shares (864.16) yesterday.

This was before I read the latest blog post about TLH

I did not know that I was supposed to switch the cost basis to "Specific Identification" prior to exchanging.

Does that mean my TLH won't work?

I changed the cost basis on the new account to SpecID but it is too late to change the old one. And the trade is already in process.

[Lithium]

Tax loss harvesting "works" when you sell shares at a lower price than you bought them for.  It sounds like you sold all of your shares because you saw that their value had dropped below what you paid for them on average.  Even though the overall value of the holding has gone down, you may have sold some shares that were still net positive, lessening the overall loss.  Tax loss harvesting works "better" when you only sell the shares that are net negative, allowing you to capture the highest possible loss.  If you bought all the shares pretty recently, it may not have made a difference, but if you had used SpecID, you could have chosen only the shares that had lost value.

[Phoenixdown99]

I sold all the shares because I had purchased some less than 30 days of the sale. So I guess it does not matter—my understanding is that I would have to sell all the shares in that situation.

[StarTrekDoc]

Right on lithium. In your case it wouldn't matter.

If you say bought 100 shares in 2010 then 50 360 days ago, and 50 just two weeks ago,... You would have chosen the 50 you bought just two weeks ago and perhaps the 50 360 days ago depending on which if it was a dog and use the loss as a short term loss and purchase something else with those proceeds at that same time.

[Lithium]

Phoenixdown99 wrote:

I sold all the shares because I had purchased some less than 30 days of the sale. So I guess it does not matter—my understanding is that I would have to sell all the shares in that situation.

Click to expand...

The concept of "replacement shares" in wash sales is not very straightforward.  My understanding is that, at least according to guidance from the IRS, if you sell some shares purchased within 30 days, you need to sell the rest of the shares bought within that period.  If you have shares more than a month old, they can be left alone.  See #4 and #5 on this link:

http://fairmark.com/capgain/wash/wsreplac.htm

[Phoenixdown99]

Got it thanks. I bought them all since Jan 1. Now I know for the future!

[ENT Doc]

Lithium wrote:

Phoenixdown99 wrote:

I sold all the shares because I had purchased some less than 30 days of the sale. So I guess it does not matter—my understanding is that I would have to sell all the shares in that situation.

Click to expand…

The concept of “replacement shares” in wash sales is not very straightforward.  My understanding is that, at least according to guidance from the IRS, if you sell some shares purchased within 30 days, you need to sell the rest of the shares bought within that period.  If you have shares more than a month old, they can be left alone.  See #4 and #5 on this link:

http://fairmark.com/capgain/wash/wsreplac.htm

Click to expand...

This is my understanding as well.  The sold shares aren't looked at as replacement shares, obviously.  But if there are others that you bought in the 30 day look-back that you haven't sold then this would trigger a Wash Sale.