Deductible Capital Loss on Conversion

I have a tax client that has personal investments in a specific Mutual Fund with Vanguard. He also has a Roth IRA in the same specific Mutal Fund with Vanguard.

The client sold $5,000 of his personal Vangurd Mutual Fund and immediately invested the $5,000 into the same specific Vanguard Mutual Fund in his Roth IRA account.

The $5,000 sale of his personal mutual fund investment resulted in a $1,500 loss.

Is the $1,500 loss on his personal investment account deductible or do wash sale rules apply?

Thank you in advance for your insight.



The IRS left this issue hanging for years, but early this year ruled that such a transaction does trigger the wash sale rules.

http://www.irs.gov/pub/irs-drop/rr-08-05.pdf

Thanks for your help.

[quote=”[email protected]“]The IRS left this issue hanging for years, but early this year ruled that such a transaction does trigger the wash sale rules.

http://www.irs.gov/pub/irs-drop/rr-08-05.pdf%5B/quote%5D

Thanks for your help.

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