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Financial Planning / Tax Strategies


Subject:  Re: Taxes on Investing Profits Date:  8/4/2011  8:11 PM
Author:  TMFPMarti Number:  113846 of 127513

Yes, you can use specific identification method if you have records to support the cost basis you are using, and your broker can execute a specific identification sale. However, per the IRS, once you choose a method for a particular fund, you must stick with it.

A clarification here. You can use specific identification or FIFO and then later decide to switch to average basis for your remaining shares in a fund. However, as noted, once you use average basis the first time for a fund you must continue using it for all remaining shares in the fund.

See Pub 564.

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