tax loss harvesting

[ericbonabike]

Never tried to do this before, and I Missed the boat for 2018.  But please help me understand a few details:

1)  I sold about 100k of SPY yesterday for a loss of about $1500.   And I will be reinvesting it back into FSKAX over the next few weeks.  I can deduct $1500 from all capital gains and dividends.  And if there is any of that $1500 I can deduct that from my MAGI up to $3000.  And anything over that I can roll into future years. 
Is that $3000 stay the same if married filing jointly?  Or can I deduct a higher amount?

2) I want to sell some FSKAX from a different account which I bought at a bad time.  And is now down 6%.  Total loss of about $1500 also.  I would like to buy FSKAX right back, but washout rules prevent me from doing that.  Fidelity just opened up a FZROX which is a zero fund total stock market index.  It hasn't been around very long, but am I clear to buy immediately as long as the tickers are different?  Or do I need to put it into something else, like Fidelity's Large Cap fund FXAIX? 

3) As far as I can see, my downsides for doing this is pretty limited.
     a)  if I'm buying/selling stock or ETFs, I will pay a small commission for each transaction.  But otherwise I won't miss any stock market action as I can move money back and forth pretty much instantly.
    b) But if I'm buying/selling mutual funds, I will miss up to one day of trading.  So, I put in sell order today for FSKAX, it closes tonight.  Tomorrow, I put in a buy order for FXAIX or FZROX.  It closes tomorrow COB.  So, if market makes a big gain tomorrow, I lose that money.
     c)  Tax liability....I might be selling stock that I've owned for a year or more and when I rebuy the clock for holding period (short term vs capital gains) restarts. 

Is there anything I'm missing??
Why wouldn't we all sell stocks/mutual funds in a bear market, riding it to the bottom, and then hold it as market improves?  Help me understand why I should be punched in the face.

[Boofinator]

Never tried to do this before, and I Missed the boat for 2018.  But please help me understand a few details:

1)  I sold about 100k of SPY yesterday for a loss of about $1500.   And I will be reinvesting it back into FSKAX over the next few weeks.  I can deduct $1500 from all capital gains and dividends.  And if there is any of that $1500 I can deduct that from my MAGI up to $3000.  And anything over that I can roll into future years. 
Is that $3000 stay the same if married filing jointly?  Or can I deduct a higher amount?

2) I want to sell some FSKAX from a different account which I bought at a bad time.  And is now down 6%.  Total loss of about $1500 also.  I would like to buy FSKAX right back, but washout rules prevent me from doing that.  Fidelity just opened up a FZROX which is a zero fund total stock market index.  It hasn't been around very long, but am I clear to buy immediately as long as the tickers are different?  Or do I need to put it into something else, like Fidelity's Large Cap fund FXAIX? 

3) As far as I can see, my downsides for doing this is pretty limited.
     a)  if I'm buying/selling stock or ETFs, I will pay a small commission for each transaction.  But otherwise I won't miss any stock market action as I can move money back and forth pretty much instantly.
    b) But if I'm buying/selling mutual funds, I will miss up to one day of trading.  So, I put in sell order today for FSKAX, it closes tonight.  Tomorrow, I put in a buy order for FXAIX or FZROX.  It closes tomorrow COB.  So, if market makes a big gain tomorrow, I lose that money.
     c)  Tax liability....I might be selling stock that I've owned for a year or more and when I rebuy the clock for holding period (short term vs capital gains) restarts. 

Is there anything I'm missing??
Why wouldn't we all sell stocks/mutual funds in a bear market, riding it to the bottom, and then hold it as market improves?  Help me understand why I should be punched in the face.

1) $3000 is married filing jointly. $1500 single.
2) Not familiar with those specific stocks, but if they have substantially identical holdings (i.e. they seek to match the same index), then I would be wary of using these as TLH partners.
3) As mentioned in my other post, there's little to no downside. a) Are you sure you're paying a commission on ETF trades? b) You shouldn't even miss a day of trading if you do an exchange. c) I wouldn't worry about the low tax basis. Either you'll live a Mustachian lifestyle and pay zero taxes (assuming the tax structure stays the same), or you'll be rich as hell and afford another percent or two of taxes (remember they only tax the gains).

[ericbonabike]

ah, ok. 
I asked fidelity and they said that converting from FSKAX to FZROX wouldn't be considered a wash sale because they're different tickers.  Is the IRS going to monitor each and every sale and compare holdings, percentages of ownership, etc?  Seems like a big job for an underfunded organization.
Also, sorry for the repeat posts....if somebody can tell me how to delete, I will be happy to :)

[terran]

I would be comfortable tax loss harvesting between FSKAX and FZROX as they follow different indexes.

Given the mutual funds you mention, I assume you're invested at Fidelity. In that case, iShares ETFs trade commission free, so ITOT would be another good option as it follows yet another total market index. It would also be more tax efficient as ETFs typically don't make capital gains distributions unlike all mutual funds except those made by Vanguard.

At least for two Fidelity funds if you're investing at fidelity (unsure about outside funds) you can exchange funds such that you both sell and buy when the market closes the day you do the exchange, so no need to be out of the market. You will need to be out of the market for a bit to exchange between ETFs and mutual funds.

[Telecaster]

ah, ok. 
I asked fidelity and they said that converting from FSKAX to FZROX wouldn't be considered a wash sale because they're different tickers.  Is the IRS going to monitor each and every sale and compare holdings, percentages of ownership, etc?  Seems like a big job for an underfunded organization.

The answer seems to be no, the IRS doesn't seem to dive in like that.   On Bogleheads they do stuff like that all the time.  Personally, I really dislike dealing with the IRS, so I try to keep my stuff as clean as possible in case the IRS decides to change their policy.   I'd do something like FSKAX to FNILX (The no-fee S&P index analog), because that really is a different thing--yet performance-wise is pretty similar.   Then just convert it in 30 days to FZROX.   That's some extra karate and probably needless, but I'm paranoid.

[ericbonabike]

And reading up on the subject...
Account #1 (owned by me) sold SPY and bought FSKAX. 

Wanted to for Account #2 (Owned by my wife)
sold FSKAX and buy FZROX.

But I believe I can't sell her account for 30 days because I just bought some FSKAX from account #1.  true?

[terran]

Correct, you can still create a wash sale across accounts owned separately by you and your wife.

You could sell the FSKAX you just bought as well as what your wife owns and put it all in one of the tax loss partners discussed in this thread.