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Author: waterfell Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Re: question on wash sale rule Date: 3/27/2008 10:41 PM
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Therefore a fund that is targeting twice the performance of a benchmark is certainly not substantially identical to a fund that targets the benchmark.
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Thanks for the feedback, but I don't think it is as easy as saying the performance goals are different, so the rule doesn't apply. If I bought call options on QQQQ after selling the regular stock at a loss, it is still a wash sale. Options have different performance from the underlying stock, but I'm pretty sure they are still considered substantially identical securities. Options are included in the wikipedia link in my original post as applicable to the rule. I don't know for certain, but I think options or futures is how QLD can achieve 200% performance.

From other sources I can find, "substantially identical" seems to be something that is hard to define, but you recognize it when you see it. Also, the word 'substantial' in the phrase may give some leeway for the IRS to interpret it any way they want. It doesn't have to be 100% identical, just substantially so.

I don't mean to ask a question and then get argumentative with the people answering. It is just I have looked other places and there is a lot to consider.

- waterfell
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