Wash sale loophole drives billions in ETF tax breaks

Forbes featured the expertise of Michael Dambra in a story about how investors are using exchange-traded funds to take advantage of a loophole in the wash sale rule. Dambra explained that because the IRS has not clearly defined what qualifies as “substantially identical,” investors can sell one ETF at a loss and quickly purchase a similar fund while still claiming the tax benefit. His research highlights how this ambiguity allows investors to maintain market exposure while systematically generating tax savings.