<BreadWithSpam@[EMAIL PROTECTED]
> wrote in message
news:yoby787m3gl.fsf@[EMAIL PROTECTED]
> "Bill" <no@[EMAIL PROTECTED]
> writes:
>
>> Am I correct that I cannot do a "like kind exchange" under the IRS
>> regulations to exchange shares in an S&P 500 mutual fund for shares in
>> an S&P 500 ETF?
>
> I've just thought of a case where such an exchange may be
> allowed - if both the fund and the ETF are just different
> share cl***** of a single fund. The only place I know of
> where that's the case is at Vanguard. But just as one
> may swap "investor shares" for "admiral shares" if one's
> account is large enough, and do so without any tax
> consequences (or just as one may exchange "b" shares of
> a load fund for "a" shares"). That's actually called
> a "conversion" and not an "exchange".
FWIW, while this will work for some Vanguard index funds, you can't do
this
for an S&P 500 fund (the OP's question), because Vanguard has no license
(from Standard and Poors) to offer ETF class shares of its S&P 500 fund.
Also, the conversion must be handled correctly by the broker (for Vanguard
funds with ETF and retail share cl*****); otherwise the swap is still a
taxable event. Fractional shares may be problematic.
Here's a letter from a Vanguard attorney to the SEC, which among other
things, describes how and why this conversion works as a non-taxable event
(see section H):
http://www.sec.gov/divisions/marketreg/mr-noaction/vanguard030905-incoming.pdf
Mark Freeland
BnetOnewsX@[EMAIL PROTECTED]
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