3

If a person sales regular ETF ( suppose QQQ) at a loss and buys a leveraged ETF on similar Index e.g TQQQ within 30 days, will the loss on QQQ be treated as wash sale ?

2 Answers 2

1

There's not a crystal clear definition of "substantially identical" securities, but I would strongly suspect that an ETF and a leveraged ETF, even on the same index, would not be considered "substantially identical". In fact, it is arguable that buying an ETF from a different provider that tracks the same index would avoid the wash-sale rules since the aim could be to pay less fees, have less tracking error, etc. (stocks would not apply because there is no practical difference between buying a stock from one broker versus another)

So you would probably be safe not reporting the sale as a wash sale and realizing your loss, but in the end it's up to the IRS to determine if your loss should be deferred.

(p.s. at worst, a wash sale would defer the loss until you sold the leveraged ETF, so if you did it in the same tax year it doesn't matter)

0

I don't think so. If you are worried about it, buy a similar leveraged ETF other than TQQQ or futures (/NQ, /MNQ).

Edit: Wash sale rules do not apply to futures. Since the OP has a taxable account, trading futures might be an alternative.

How Are Futures and Options Taxed?

1
  • Your answer could be improved with additional supporting information. Please edit to add further details, such as citations or documentation, so that others can confirm that your answer is correct. You can find more information on how to write good answers in the help center.
    – Community Bot
    May 15, 2022 at 1:17

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .