Message Font: Serif | Sans-Serif
UnThreaded | Threaded | Whole Thread (13) | Ignore Thread Prev | Next
Author: UUinMN Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 123151  
Subject: Re: Choosing Which Shares to Sell Date: 10/7/1999 3:34 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Hi, ak4cea. When you sell part of your position in a stock, you get to choose which accounting method you'll use. Then you use that same method for all subsequent sales, until your position is closed. Besides First In First Out (FIFO), there's Last In First Out (LIFO), and Average Cost. I think that's it.

You're right, that which shares you sell first can affect the tax bite. In your particular example, I would sell the older shares first, just to get the lower tax rate. If you hold those newer shares just another 4 months, the tax rate goes down. So even though you pay more taxes for the first sale, there's a good chance of paying less overall. This method could fail if:

1. You hold those newer shares so long that the opportunity cost of paying taxes early overwhelms your later tax savings.

2. You hold those newer shares indefinitely (your heirs don't pay taxes on your gain),

3. You give them away (ditto for a charity), or

4. The tax law changes!

Fool on!
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (13) | Ignore Thread Prev | Next


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Post of the Day:
Saul's Investing Discussions

Skyworks Mid-Quarter Review
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.