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Subject:  Do I have a wash sale?? Date:  4/8/2002  4:20 PM
Author:  TMFShogun Number:  60106 of 127745

I am winding down the last bit of my taxes and I have come across a situation that confuses me, probably because I got to thinking about it too much. An objective POV would be much appreciated to help me preserve my sanity!

I purchased shares in a Vanguard U.S. Growth Index fund in 1999. I set up the account with an expressed preference to reinvest any dividends. I sold all my holdings on 5/4/2001 at a slight loss on the short-term holdings (am using double-category cost basis averaging to calculate gains/losses). Now, since I reinvested dividends on a monthly basis (i.e. 4/30/01 was the most recent reinvestment when I sold on 5/4/01) to purchase more shares, do I have a wash sale on my hands?

I am thinking that NO, I don't, because I did not purchase separate shares in the mutual fund 30 days before or after the sale, nor do I maintain any assets in that fund since the sale on 5/4/01. But I read something in publication 550 (I think) that mentioned mutual funds and it confused me to a point that I am not sure I can answer this question on my own. Does anyone have any idea on this?

Thanks in advance!

<yes, even TMFers have tax questions too> ;-)
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