We know that a trade in currency ETF's generates ordinary income as opposed to the cap gains as would be exhibited by an equity.
My question is: can I apply the same 60 day wash rule to the currency ETF, similar to if it were an equity?
Can I sell, re-buy within 60 days, the currency instrument and have it be a non-tax-event?
thanks
Steve
Yes. Except replace "60 days" in your sentence above with "30 days". The 60 days refers to 30 before to 30 days after the date you closed the first transaction. For example you can sell your ETF on
2/1/2010, and if you bought the the new ETF on 2/1/2010 the wash rule would apply. But some smart people may first buy more ETF on 1/31/2010, then sell the first batch on 2/1/2010. It might appear that the wash rule does not apply because they did not re-buy within 30 days after 2/1/2010. However, they did buy within 30 days before 2/1/2010, and so the wash sale rule does apply.However, the way you describe it seems the wash rule is a good thing. The wash rule only applies when you have a loss. If you have a gain, then you do have to pay your tax. If you have a loss and the wash sale rule applies, then the loss is carried forward. Might not be a bad thing as long term rates will likely go to 20% next year.
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