Paul B. wrote:

- quote -

Heard back from OptionsXpress, they allow an email the same
day of the trade. Interactive Brokers does not offer
specific ID service. So availability and mode of execution
varies. Thanks again to all.

Paul

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Paul B. wrote:

- quote -

Thanks for the very helpful answers to this question!
Electronically held shares themselves are of course
fungible; it's a requirement of recordkeeping that the
government makes, to prove initial intent. The article Rich
Carriero linked to was especially helpful.

I've contacted Ameritrade, and Specific ID is available
there when placing a trade through a broker at the time of
sale. I have two other houses I've got queries into.

Paul
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"bill brown" <bill[at]squires.com> writes:
- quote -

Fidelity has done this even a step better. For close to two
years now, Fidelity lets you make a specific shares
designation on-line as part of placing the order on-line.
The designation info is then printed on the confirmation
slip they send you. Very nice. The basis tracking system
appears pretty sophisticated. It even properly adjusts
basis and holding period for wash sales and even properly
apportions long-term/short-term gain/loss on Sec 1256
contracts (!).

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

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"Paul B." <pb_public[at]operamail.com> wrote:

- quote -

I asked Charles Schwab that question and their answer was
you must call them as soon as the on line trade happens and
they will make a note of which shares you indicated you
sold. Recently they have pushed to have the date and price
basis listed for all your holding. It was a task going
through 7 years of old records but it is now done and it
will make this process very simple. I assume other brokers
are/will be offering a similar service.

-bill

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"Paul B." <pb_public[at]operamail.com> writes:

- quote -

[snip]

[and if you don't do that, specific ID fails and you
default to FIFO]

- quote -

It doesn't. That's your problem. Switch to a broker that
understands and supports specific-shares orders.

- quote -

It means what it says. If you make a valid specific ID, you
use for a cost basis of the sale the cost basis of the
shares designated. If you fail to make a valid specific ID,
FIFO applies and you use for a cost basis of the sale the
cost basis of the oldest shares sitting in the account. The
tax difference may be enormous.

- quote -

No, they are not. They represent blocks of shares bought at
different times, with different cost bases, and therefore
are absolutely NOT interchangeable, tax-wise.

- quote -

No, you can't. The key point is that you need to have
independent (from you) confirmation of your designation.

Also see:
http://www.fairmark.com/capgain/ident.htm

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

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"Paul B." <pb_public[at]operamail.com> wrote:

- quote -

If the brokerage doesn't provide a way to designate specific
lots, then you're presumed to be selling the oldest shares.
Let's hope that the money you've saved in brokerage fees
makes up for the extra capital gains taxes you'll have to
pay because you can't specify shares to sell.

Yes, all the shares are fungible. The purpose of the
requirement is to document the fact that you made a
conscious decision to sell specific lots. If you don't do
your homework, the government often gets the benefit.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA

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I culled the following from a Yahoo article on tax planning
for investors:

"you can further reduce taxes by telling your broker to sell
your highest-cost shares when unloading part of your
holdings in a stock. Using this "specific ID method"
requires you to identify the shares to be sold by specifying
their cost and purchase dates. You must also receive a
written confirmation of your instructions from the broker or
keep a record of your oral instructions. Put this in your
tax file for safekeeping.

"If you don't follow this procedure, you must use the
first-in, first-out (FIFO) method, meaning the shares you
bought first are considered sold first. Those were likely
the cheapest — giving you the biggest possible tax hit. The
point to remember is that you must take action at the time
of sale to use the specific ID method."

The question is, how can the Specific ID method work when an
investor is calling his own trades in via a low-service
online broker? And what does it really mean anyway, since
shares sitting in an electronic account are essentially
fungible?

When selling, can I simply specify which shares I want to
consider sold when logging the trade?

Thanks for any insight!

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Paul
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