Wash Sale

[Jesse]

2002 Tax return:

Taxpayer originally invested $30,000 between 3 different funds - Thrivent Equity Income/Capital Growth/Small Cap.

The funds decrease in value, now worth $20,000 so taxpayer pulls $8,000 out - cash - and reinvests the other $12,000 into Thrivent Money Market Fund.

Would the $12,000 need to be traced and subject to the Wash Sale rules?

[sea-tax]

2002 Tax return:

Taxpayer originally invested $30,000 between 3 different funds - Thrivent Equity Income/Capital Growth/Small Cap.

The funds decrease in value, now worth $20,000 so taxpayer pulls $8,000 out - cash - and reinvests the other $12,000 into Thrivent Money Market Fund.

Would the $12,000 need to be traced and subject to the Wash Sale rules?

I will say I don't think so, based on the limited information you provided. see TTB delux 2006 page 6-10.

I don't think that a MMFund is substantially identical security to a stock fund.
If the client bought the same fund back again within the 30 day time period then that might be a different story.

[Jesse]

Possibly over-thinking, but, I was thinking these are mutual fund accounts through the same company therefore = substantially identical securities. However, this would not hold true as the investments for each of these "pooled" funds would not be substantially identical, correct?

[Kram BergGold]

Absolutely not

A MM fund has a constant $1 value, so in no way could this cause a wash sale.