Hi,First, an observation:I purchase two lots of mutual fund shares:1) 100 shares @ $20/share (this lot now qualifies for LTCG)2) 100 shares @ $10/share (this lot is still short term).If I sell all 200 shares today at $25/share, I will realize $500long-term capital gain and $1500 short-term capital gain. This wouldbe true weather I use FIFO, or Specific Id. or Average Cost - DoubleCategory.But instead, if I want to use Average Cost - Single Category, theaverage cost would be $15/share. Therefore, using this method, I wouldrealize $1000 long-term capital gain and $1000 short-term capitalgain, making this method more beneficial.Until now, I was under the impression that Specific Identification isalways the best method to calculate capital gain/loss, so I found theabove quite interesting.Now, my question: I owned a fund in which I purchased several lots ofshares at different prices. Then, I decided to close my position inthis fund, and sold all shares in a single transaction. Since I wasclosing my position, Specific Identification would have been the sameas FIFO, so I didn't specify shares to be sold. Now, I find that mysituation is like the above example, and Avg. Cost - Single Categoryis more beneficial to me. Since this is my first sale of the fund, Ican now choose between FIFO and Avg. Cost - Single Category. If I useavg. cost now, will I be stuck with this method if and when I reacquire aposition in this fund at a future date ? In that case, under what conditions will theIRS approve my request for change in accounting method to switch backto Specific Identification ?Thanks,-Amol.
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