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[[ says that is fine, but posts by you and Bob in the past have said
otherwise. Infact, I think it might say otherwise in the FAQ. It was this that I
didn't remember seeing anything on in 550, but I also wasn't looking for it
because I have yet to sell any of my shares and so can just specify everything.]]

Let me just say this: I don't necessarily disagree with what Kaye has to say in his site. But I'm not sure, because of the lack of case law, that he is 100% correct. Heck, I'm not even sure that the system that I use is 100% correct. But I'm reasonably comfortable with it. I believe that Kaye is more agressive on this issue than I am. Nothing wrong with that. But if you are looking for 100% clarity on this issue, you'll either have to follow the IRS guidelines, or sell all of your stocks and simply buy savings bonds. I can't give you the 100% answer that I'm afraid that you looking for.

[[ But Bob just wrote in and said he had been confused before, and that this "rule"
is not for my question has been answered (but do you agree with
that. I'll search through the FAQ and see if it is wrong there if you do agree on

All I can tell you is that the quote that I gave you came directly from Pub 550. And that statement basically follows the regulation on this issue. So the IRS position (at least publicly) is clear. I have represented clients in audit that have used different methods, and those methods were "passed" on by the IRS...because the dollars involved weren't worth fighting over. But simply because the IRS overlooks something in audit doesn't mean that they are giving their approval one way or another.

So you'll just have to read everything that you can on the issue and take your best shot. If you like Kaye's method...use it. Just know that it may not be 100% correct.

Again, if you want 100%, follow the IRS guidelines.

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