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Author: KATinChicagoland Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Re: Choosing lots from different accounts? Date: 12/22/1998 3:24 PM
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As I understand your question, you would like to sell stock from one account but use the identification rules in such a way that you'll report your gain as if you sold stock from another account. I'll make up an example to make it clear:

You bought 100 shares XYZ in 1996 at $40 in account A

You bought 100 shares XYZ in 1997 at $45 in account B

Now you want to sell 100 shares XYZ, when it's trading at $50. To minimize taxes it would make sense to sell the shares in account B. For some other reason, it makes sense for you to sell the shares in account A. So the question is, what happens if you sell the shares in account A but "identify" the shares as coming from account B?

The regulations don't specifically address this point, and they don't require the broker to actually sell the shares that are identified. In my view, however, they imply that the identification rules apply only to the extent necessary to determine which shares from among multiple lots held in the same account have been sold. In other words, the account designation acts as an overriding identification. That's just my interpretation, based in part on the way this regulation reads and in part on identification rules involving separate accounts that apply in connection with other tax rules.

In short, if you sell from account A while identifying the shares as coming from account B, I think the IRS could challenge the identification and would probably (although not definitely) win.

Kaye Thoomas, author
Fairmark Press Tax Guide for Investors
http://www.fairmark.com
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