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Q:

I own shares of BRK.B in different (taxable) brokerage accounts. I would like to sell some B shares and replace them with A shares, as the spread is about nil (30:1 assumed).

In one account, I have owned the shares for over 5 years. Cost basis well below market. Selling "these" shares to go into A shares would create a taxable event that I would be a fool to initiate.

In the other account, I own shares just slightly above current levels. From a tax standpoint, "these shares" could be sold and replaced with A's without tax consequence.

However, the brokerage company for the second group of shares has an online restriction on trading BRK.A shares, and they require the help of a broker to do the trade on the A shares. That means that I would have the difficult task of legging the trade, paying away the bid-offer spread, and lose the time advantages that I would otherwise have while being able to switch "by myself" online when the spread was favorable. This restriction is not in place at the brokerage where my older B shares reside.

My question...is not about BRK and its 2 classes of shares. It is about the US tax code. Does it matter that I sell shares at one brokerage shop where the actual shares were purchased years ago at lower levels...and assign, for tax purposes, the acquisition cost of shares actually purchased at another broker? In theory, I could move shares from the first broker to the second, but that seems redundant. Does the IRS really care which broker did my trades for certain shares sold? Or does it just matter that I accurately assign a price to shares sold?

TIA-

ET
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Can you request BBK replace B shares with equivalent A shares? At their discretion to honor the request, they use to allow the request.

Debra
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In one account, I have owned the shares for over 5 years. Cost basis well below market. Selling "these" shares to go into A shares would create a taxable event that I would be a fool to initiate.

In the other account, I own shares just slightly above current levels. From a tax standpoint, "these shares" could be sold and replaced with A's without tax consequence.

However, the brokerage company for the second group of shares has an online restriction on trading BRK.A shares, and they require the help of a broker to do the trade on the A shares. That means that I would have the difficult task of legging the trade, paying away the bid-offer spread, and lose the time advantages that I would otherwise have while being able to switch "by myself" online when the spread was favorable. This restriction is not in place at the brokerage where my older B shares reside.

My question...is not about BRK and its 2 classes of shares. It is about the US tax code. Does it matter that I sell shares at one brokerage shop where the actual shares were purchased years ago at lower levels...and assign, for tax purposes, the acquisition cost of shares actually purchased at another broker?


Only in the sense that you cannot do it.

You are presumed to sell the oldest shares you own (FIFO) unless you specify at the time of sale that you're selling other shares. If you want to use your preferred broker for this transaction you're going to have to move the shares you want to sell to that broker. No way around it.

Be sure to read up on specific identification in the FAQ and make sure your broker can provide you with substantiation of the specification before you do anything.

Phil

P.S. I'm unsure if the intended sale of your B shares would result in a loss or not. If it does, the purchase of the A shares would turn it into a wash sale.
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2 replies...

One cannot switch A's for B's. One convert the other way (A's to B's) though one loses voting rights. The B's have 1/200th of the voting rights and 1/30th of the economic rights of the A's. Again, the fact that my trades are in BRK are not material to my question.

Phil - TVM. The B's I'm long, and considering selling were purchased between $2740 and $2900...and depending on how many I convert, the average is around $2830...just slightly north of market. Any loss/gain here is pretty irrelevant and I will account for it in a proper way. I guess that I really need to move the newer shares to the older pile to get away with this. Oh well. Probably not worth it. I'll just have to leg it in a less liquid way.

ET
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Why can't you sell the identified shares in the account where you have the high cost basis shares, and then move the money to the other account and buy the BRK.A shares there?

- Megan
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Phil said: You are presumed to sell the oldest shares you own (FIFO) unless you specify at the time of sale that you're selling other shares.

I don't think you meant to say that, Phil. FIFO applies in regards to the shares in the account you sell from, not ALL the shares you own. ed
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I don't think you meant to say that, Phil. FIFO applies in regards to the shares in the account you sell from, not ALL the shares you own.

Actually, I meant to say what I said specifically to OP, but your way is much better. Thanks.

Phil
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