A substantially identical instrument is a security treated as equivalent to another for applicable tax-law purposes. The distinction matters in tax-loss harvesting: replacing a security with one that is too similar can create a wash sale and affect the associated tax loss. section 14.4.2 section 14.2.2
Choosing a replacement ETF
SPY, IVV, and VOO all track the S&P 500, so they may be considered substantially identical. By contrast, PBUS and VTI can differ in trading cost, liquidity, index breadth, and holdings; how similar is enough remains an investor judgment. section 14.4.2
Automated wash-sale checks can represent different tickers as disjoint sets of instruments considered substantially identical. For each set, the process checks recently purchased lots, loss status, holdings, and blocking lots before approving sales or purchases. section 14.2.2
