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We had a long thread on this topic in January (Phil and some of the other pros provided the answers), but I don't know how to find threads.

As best I remember, you cannot take a loss on the "deemd sale and repurchase" and the clause does apply to mutual funds. Also, you will later have to pay the 18% rate from a lower cost basis if you have a loss and you have to pay taxes in 2001 on a gain.

I also intend on holding, especially mutual funds, for a long time. I figured the "deemed sale and repurchase" was worth doing with paper losses of around 10-15% (assuming historically normal gains for the next 10-15 years). If you've been dripping money into a mutual fund, you may want to do the "deemed sale and repurchase" specifically with shares which fall into this 10-15% loss (which is true for much of my drip money into S&P fund for 1999-2000). On the other hand, it may not be worth the paperwork.
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