If one can legally bypass wash sale rules, it seems like a HUGE advantage to me, and one that should be pursued by those with a TIPS ladder on a regular basis. Especially in times like now, when yields are high, and many of us are probably experiencing substantial unrealized losses.I can't think of a reason not to do this.This is probably a naive question, but....
Can you do creative tax loss harvesting with TIPS, by selling any TIPS that have lost value relative to cost basis and buying TIPS with similar , but different, maturities?
EXAMPLE:
Hypothetically, say your (adjusted) cost basis for Jan. 2033 TIPS is $100K, and their current value is $95K .
You sell your Jan 2033 TIPS, realizing a $5K loss.
You then buy $95K worth of July 2033 TIPS with the proceeds.
The only real cost to your portfolio is small bid/ask spreads (and maybe a small difference in YTM), but you get to claim a $5K loss on your taxes.
You could do that with all of your TIPS that are selling at a loss, if there are other fairly similar TIPS with close maturity dates and close yields.
I think I am probably missing something here....it seems too easy, and I have not read about people doing this.
The Regulations:
Reg Sec 1.148-4(b)(2)(ii) states that “Generally, bonds are substantially identical if the stated interest rate, maturity, and payment dates are the same.”
In the above component chart, stated interest rate would correspond to coupon rate, maturity would correspond to maturity date and payment dates would be a component of how the stated interest rate is implemented.
Therefore, the converse must also be true, that if those components are materially different or maybe even marginally different, the bond would not be substantially identical."
https://www.optionstaxguy.com/substanti ... onds-v-opt
Are you doing it (in taxable accounts)? And if not, why not?
Statistics: Posted by protagonist — Fri Mar 22, 2024 10:30 am — Replies 1049 — Views 152604