Mark Freeland wrote:
- quote -

Mark, that's a good point. IME most people up picking average cost -
it's the easiest, and it's what's listed on many account statements. But
if you don't do that you can switch between FIFO & specific ID.

-Tad

Tad Borek wrote:

- quote -

It is also true for mutual funds that "you can pick the method you want
to use at each sale, and use a different one each time (regular FIFO or
specific identification)."

So long as one stays within the list of choices given (FIFO and specific
identification), one may switch freely between them. It is only if one
uses an average cost method, available only for funds and not stocks,
that the rules change (there's no turning back once one switches to
average cost).

As with stocks, if you don't identify the method used, the IRS assumes
FIFO.

See IRS Pub 564 http://www.irs.gov/publications/p564/ar02.html#d0e1268

(To give a plug for Fidelity - they will let you identify specific
shares of a fund online.
http://www.kiplinger.com/basics/mana...xes/basis.html)

--
Mark Freeland
nBeOwXs[at]pacbell.net

mrchongo[at]hotmail.com wrote:
- quote -

When selling stock the default rule is FIFO...unless you say otherwise,
the IRS assumes you sell the batches in the same order that you bought them.

But you can also use "specific identification" and select the lot or
lots that you're selling in a given transaction. The IRS says that you
need to make the selection at the same time that you sell the stock (not
weeks later or when preparing your taxes), inform your broker, and be
provided a written acknowledgement from your brokerage firm. Even online
brokers are equipped to do this, with some you can enter that info when
you sell, with others you need to call them up and ask that it be added
to your trade confirmation (be sure to keep a copy of that with your tax
files). The confirmation will include a note something like this at the
bottom:

VS PURCHASE 2/3/1996
if that's the lot you told them to sell.

Again, if you don't do that, the IRS assumes FIFO.

Unlike with mutual fund share sales, you can pick the method you want to
use at each sale, and use a different one each time (regular FIFO or
specific identification). Sometimes you might want to sell your
low-cost-basis shares, other times high-basis, it depends on your tax
planning for a given year.

-Tad

mrchongo[at]hotmail.com writes:

- quote -

If you don't make a valid, prior-to-sale specific ID of the shares
you are selling, then yes, you have no choice but to use FIFO.

See: http://www.fairmark.com/capgain/ident.htm for more details.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

I acquired 3000 shares of XYZ over two years....each block at a lower
price. I really chased it all the way down! Now I'm selling 1500
shares at a loss. What acquistion price do I use to calculate the
loss? Is it FIFO? That is to say, do I calculate the loss based on the
highest-priced, earliest-acquired blocks of XYZ that I bought, and
work my way down in the same order in which they were bought? Thanks.