Rick,
For taxable mutual fund holdings that have multiple purchases or reinvestments over many years, consider using the specific identification method, i.e., selling those tax lots that have losses - in place of the default average cost method. One should generally notify the custodian of the method employed before or upon sale. Vanguard International Growth Fund (VWILX) shares purchased prior to 2019, for example, may still have unrealized gains. Shares acquired through purchases or reinvestment since 2019 may have unrealized losses. One might choose to sell only the more recently acquired VWILX shares that have unrealized losses. Good point about turning off the automatic reinvestment if one does not sell all holdings in a fund. Thanks for writing the column and alerting readers to the strategy to harvest losses and avoid gains from LTCG distributions.
Comments
Rick, For taxable mutual fund holdings that have multiple purchases or reinvestments over many years, consider using the specific identification method, i.e., selling those tax lots that have losses - in place of the default average cost method. One should generally notify the custodian of the method employed before or upon sale. Vanguard International Growth Fund (VWILX) shares purchased prior to 2019, for example, may still have unrealized gains. Shares acquired through purchases or reinvestment since 2019 may have unrealized losses. One might choose to sell only the more recently acquired VWILX shares that have unrealized losses. Good point about turning off the automatic reinvestment if one does not sell all holdings in a fund. Thanks for writing the column and alerting readers to the strategy to harvest losses and avoid gains from LTCG distributions.
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Link to comment from December 7, 2022