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The ETF Tax Strategy Built on a Wash Sale Gap
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Subscribe27 APR 2026 / ACCOUNTING & TAXES
Exchange-traded funds (ETFs) are techniquely letting some investors sell one ETF at a loss, then buy another that tracks the same index, enabling them to maintain their exposure and book the loss, circumventing the wash sale rule designed to prevent such moves. The loophole is being increasingly utilized, with institutional investors having swapped around $417 billion worth of similar ETFs since 2001, generating nearly $84 billion in realized losses, raising concerns government may step in to close this vague tax loophole.
The market has a funny way of rewarding creativity. Not innovation in the product sense, but creativity in how rules get interpreted. Right now, one of the quietest tax strategies on Wall Street is not about picking the right stock. It is about selling th...
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