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Author: TMFDj Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121258  
Subject: Re: Stock Cap Gains Question Date: 8/28/2005 6:18 PM
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I have detailed records of my purchases, dividends, etc. for stock purchcases. I intend to sell a portion of one equity that was acquired over a period of years. I have read the IRS's "default" position is FIFO, but as long as I can specifically identify purchase lots, are there any restrictions on which lots (or portions of lots), I choose to sell?

The authoritative reference is IRS Pub 550, Investment Income and Expenses:
http://www.irs.gov/pub/irs-pdf/p550.pdf

These two TMF articles have simplified versions of the answers you seek:
http://www.fool.com/taxes/2000/taxes000818.htm
http://www.fool.com/taxes/2000/taxes000825.htm

The key is that you must have documentary evidence that you identified specific shares to your broker, and your broker must confirm that he or she sold the specific shares. Full-service brokerages usually include this service as part of their normal commissions. Discount brokerages rarely offer this service (because it increases their costs).

This link will take you to other TMF articles on Investor Tax Issues:
http://www.fool.com/taxes/taxcenter/topics/investor.htm

David Jacobs
TMFDj
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