The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: CG Tax general question Date:  5/6/1997  10:40 AM
Author:  TMFTaxes Number:  14 of 123142

On Tue, 06 May 97 03:56:58 -0600, katzz22 wrote:

OK. Here's the scoop. After getting our finances in order and beginning our portfolio with index funds, we've tiptoed into the UV4+ strategy. Last month, we emailed our new online discount broker (DATEK) about selling the highest cost basis equities first. They said they use a FIFO method of selling shares, but that our taxes are our own concern 'cause they only report sells to the IRS, not buys.

Then last week, we emailed them (again!) with the request that they confirm

receipt of our email which included a standing direction to sell the highest

cost basis shares first. In the email, we made it clear that we would keep our

own detailed records to make the shares identifiable, but that we simply wanted

confirmation from them that they received our request. They emailed back with

'Your email has been received.'

Here's our question: DOES this count? Is this what's meant by written proof of

our direction to our broker? (For more background on this, there's a FAQ in

Are Datek's methods kosher and can we keep our own records for tax

accounting purposes to specifically identify the shares we sell? ...'Discount'

broker isn't much of a discount if we end up shelling out more in capital gains

tax with FIFO. A more expensive regular broker that will keep our specific-ID

request on file might even be better. Right? If that's the case, then choosing

the right broker is a significant part of our tax strategy....

Thank you in advance for any feedback. Any responses are appreciated.

(please post to the board)

--- Nervous first-timers from Arizona>>

Howdy there, AZ neighbors...Greetings from Tempe!!!

Since I was the person who wrote the FAQ that you make reference to (thanks for taking the time to read it BEFORE posting...much apprecited), I suppose that I can weigh in with my thoughts.

Remember that when the tax laws were originally written regarding specific identification, on-line trading and discount brokers were never even imagined. So we are all breaking new ground here. That being said, I would be co