Tax loss harvesting with stocks and ETFs

Question

Suppose I'm taking losses in a set of individual stocks (X, Y, Z ...). What are the US tax implications if I sell all of them, harvest losses for tax purposes, and select an ETF E with significant exposure to X, Y, Z and buy immediately. Would that trigger wash sale?

Bob Baerker · Answer

The wash sale rule applies to "substantially identical" stock or  options.
An ETF is not a "substantially identical" to any individual stock.  The only way that it would be applicable would be if one owned (or was short) all of the stocks in the ETF.

Tax loss harvesting with stocks and ETFs

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