Capital losses.....

[MomofFour]

I am looking to some of my mutual funds this week and will take a loss on them. I remember reading in a magazine that you couldn't write off a loss if you reinvested in another mutual fund in the same class within 30 days of the sell.
Is this true?
Any more specifics would be greatly appreciated!
Thanks!

[disneysteve]

The Wash Sale rule says that if you sell a security at a loss and purchase a "substantially identical" security within 30 days, you can't claim the loss on your taxes.

The gray zone is what constitutes "substantially identical." If I sell Pepsi stock and buy Coke stock, does that count? Probably not. If I sell my Vanguard S&P 500 Index and buy Fidelity S&P 500 Index, that probably would count.

Most funds are different enough that I don't think it is an issue as long as you don't buy back the exact same fund.