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Author: GlowingFire Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: Long & short of stock sales Date: 3/29/1998 3:21 PM
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I need help understanding the correct way to report says of stock this year. Here is my situation:

(1) 7/5/96 ... bought 100 shares of Donna Karan (don't ask why). Total cost (with commission) was 2829.00.

(2) 7/14/97 ... DK is in the toilet ... bought 500 shares more. Total cost was 5456.88.

(3) 7/29/97 ... DK jumps up briefly. I wasn't Foolish at the time, so I get really excited. I sell 500 shares. Total proceeds (minus commission) was 6193.87.

So ... as I see it, there are three strategies here. I don't know which would be better, or which are even legal. So let me know what I am supposed to do here:

(a) Report the sale as being just the 500 shares I bought two weeks earlier. This makes a short-term gain of 736.99.

(b) The proceeds come to 1358.774 per hundred shares. Report the sale of my 100 shares long-term at a loss of 1470.23 (1358.77 - 2829) and the sale of 400 shares short-term at a gain of 1069.60 (5435.10 - 4365.50).

(c) Lump the short- and long-term shares together, getting an average cost basis of 1380.98 per hundred shares. Report the sale of my 100 shares long-term at a loss of 22.21 and the sale of 400 shares short-term at a loss of 88.82.

I should mention that I have other long-term gains to offset, totalling a little over 2100. I'm in the 28% tax bracket. What should I do? What CAN I do?

==> david
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