So let's say the new FIFO rule takes effect with respect to sale of securities. If you have your entire taxable account in one place I can see how this would prevent TLH. Saw a Morningstar article that opened up a possible door to TLHing, albeit more annoying and complex. While not specifically outlined in the article, I imagine it would go something like this:
1. Open up a new taxable account at, say, Fidelity. Maintain one at Vanguard. Put in $X to TSM investor shares at Fidelity.
2. Wait until your next planned deposit. If the prior deposit is at a loss, TLH at Fidelity. If stable, keep it and place additional funds. If the original investment goes up, do an in-kind transfer to Vanguard (at which point it upgrades to admiral shares), and put your next investment into TSM investor shares at Fidelity.
You could also do >2 brokerage firms, but you're essentially using a fresh purchase so that the new FIFO rule will be satisfied with a TLH.
Issues:
1. What happens to partial shares with an in-kind transfer?
2. Brokerage firm screwing up your cost basis, need to maintain (more) diligent records.
3. Paying a higher expense ratio for investor shares with what otherwise could have been admiral shares at Vanguard, at least while the funds are still at Fidelity.
4. Is this legal (step doctrine, etc.)?
Thoughts?
1. Open up a new taxable account at, say, Fidelity. Maintain one at Vanguard. Put in $X to TSM investor shares at Fidelity.
2. Wait until your next planned deposit. If the prior deposit is at a loss, TLH at Fidelity. If stable, keep it and place additional funds. If the original investment goes up, do an in-kind transfer to Vanguard (at which point it upgrades to admiral shares), and put your next investment into TSM investor shares at Fidelity.
You could also do >2 brokerage firms, but you're essentially using a fresh purchase so that the new FIFO rule will be satisfied with a TLH.
Issues:
1. What happens to partial shares with an in-kind transfer?
2. Brokerage firm screwing up your cost basis, need to maintain (more) diligent records.
3. Paying a higher expense ratio for investor shares with what otherwise could have been admiral shares at Vanguard, at least while the funds are still at Fidelity.
4. Is this legal (step doctrine, etc.)?
Thoughts?
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