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[[I'm afraid that this is mistaken. There are four methods for accounting for mutual
fund withdrawals: FIFO, single-category average cost, double-category average
cost, and specific identification. Even if you're cleaning out the fund, you should
still calculate gains under both FIFO and single-category average cost, because
the second method can (albeit rarely) convert some short-term gains to
long-term gains.]]

Correct...and you can learn more about the details of these methods in IRS Publications 550 and 564 at the IRS web site. In addition, I believe that I have some additional information on these issues in the Taxes FAQ area. I KNOW that we cover these issues, with examples, in the TMF Investment Tax Guide.

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