Author Topic: Should I be doing wash sales to raise my basis while I'm in the 15% bracket?  (Read 2017 times)


  • Handlebar Stache
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Sort of explains itself, hopefully.  I'm up about $1100 long-term gains in VTSAX.  Should I sell some and buy something roughly similar like the the large cap ETF?  (I'm assuming exchanging it for VTI, the total market ETF, would trigger unhappiness from Vanguard.)

I think this is not technically a wash sale since there's not a loss.  The point is I want the gains to show up on my taxes this year when I don't have to pay taxes on them.

And how would I do this on Vanguard?  I assume I should select FIFO accounting method.  And then go through the records to calculate how many shares to sell.  Is that right?  Right but over-complicated? 

Thanks for any thoughts.  Sorry if this is a stupid or nonsensical query.


  • Pencil Stache
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That's a reasonable thing to do. I personally try to keep my income straddling the 15%/ 25% tax bracket before IRA contributions so that I can contribute the exact amount to stay out of the. 25% tax bracket. This involves exchanging funds to redeem long term capital gains when possible. Keep in mind vanguard takes a day or two to exchange the funds so their estimated gain is almost always not what your actual gain will be.


  • Walrus Stache
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As far as I know, you don't even have to buy something similar.  I don't think the wash sale rule applies when you have a capital gain (research yourself to be sure, I am not a tax professional).

Mister Fancypants

  • Bristles
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Wash sales only apply to losses, you can sell a security to take the gains and then pay the tax short or long term depending on your holding period, then immediately rebuy the same security and hold it with a higher cost basis. Vanguard should not have a problem with you doing this unless you have bought, sold and rebought within a very short timeframe like 30 days, each brokerage has their own time frame, they don't like rapid turnover in funds it causes overall tax inefficiency in the fund, you will have no issue doing this with ETF's however as they can be created on the fly (Creation Units).

Also your mutual fund company might not like it if you do this often, for the same tax reasons mentioned above, they might call you or send you a leter of warning, but you should be have no issues, if you are concerned just buy the ETF version of the mutual fund or vice versa and the issue will be nonexistent as they are not the same security even though it is the same basket of stocks being tracked in the same index.

This is tax gain harvesting, if you happen to have a loss in some other security that would offset the gain then you can avoid the taxes completely, but that is a separate issue.

-Mister FancyPants