Can someone please tell me if UNL and UNG are ‘substantially identical’ stock for wash sale purposes. I have incurred heavy losses on UNL shares and intend to sell them to harvest the tax loss against some long term capital gains. I was going to start investing in UNG (without the 30 day wait). UNG is “United States Natural Gas Fund, LP” whereas UNL is “United States 12 Month Natural Gas Fund, LP”.
I have a similar situation with IEO (iShares U.S. Oil & Gas Exploration & Production ETF) which I plan to sell at a loss and start with XLE (Energy Select Sector SPDR Fund) without waiting for 30 days.
UNL and UNG have different time horizons so their risks aren’t identical. IEO and XLE invest in different parts of the energy space (IEO is focussed solely on exploration and production, XLE is broadly invested in the energy sector), so they also are not substantially identical.
“Substantially identical” means that the risks and rewards of the two investments are “substantially equivalent”. Investing in the same space, but at different proportions, or at different time horizaons, creates differences in the potential risk and reward. It isn’t sufficient to say that "if energy prices change, both will move in the same direction.{
I now have the flexibility to start buying the alternative stocks immediately after the sale or waiting/drip feeding based on how the stock prices change.