General Question
Good morning:
Hoping someone can help,
Client has a NQ brokerage account.
An advisory platform requires only a certain share class of funds is in a managed account.
The client has shares in a fund that she has held for a long time. Pays a 5.5% dividend but has an unrealized loss of about $16k in the position. This fund was bought way before I got her as a client.
If the fund is converted will she recognize the loss? Or is it a wash for taxes?
Thanks in advance.
Permalink Submitted by Alan - IRA critic on Mon, 2019-04-01 18:29
Conversion of a share class to another share class is typically treated as a non taxable swap and no 1099B is issued. But this should be verified with the broker before acting. If a 1099B is issued, that also triggers a wash sale since basically identical shares will be purchased within the wash sale period and the loss will have to be deferred instead of realized. On the other hand, if client wants to harvest some or all of the 16k cap loss, they should sell the shares and not convert, then either buy something not identical or wait 31 days to purchase the other share class in the managed account. It does not matter whether the managed account requires a transfer into another brokerage account number or not.
Permalink Submitted by Geoffrey Kasher on Tue, 2019-04-02 14:45
thanks