Message Font: Serif | Sans-Serif
No. of Recommendations: 0
The approach Roy describes isn't in literal compliance with the regulations so it isn't completely safe. Still, it has a reasonable chance of standing up in court and it beats doing nothing. Apart from some risk of an IRS dispute, there's also the problem that selling the highest basis shares doesn't necessarily produce the best tax result.

Fidelity isn't alone in providing poor service on this issue. I've inquired of several online brokers and have yet to find one that provides a means to identify shares in the manner provided in the regulations. That's pretty disappointing, considering how easy it would be to do that. All they have to do is provide a way for you to communicate your identification at the time of the sell order (a "comments" box on the order form would do the trick) and provide written confirmation (simply print the contents of the "comments" box on the cinfirmation slip they're already sending).

What I'd like to see is establishment of an alternate method of identification that doesn't require broker cooperation. After all, the only point of notifying the broker is to provide third party verification that the identification was made at the time of the sale. It should be equally acceptable to notify any other third party that will be able to verify the notification. But don't hold your breath waiting for change in this rule.

Kaye Thomas, author
Fairmark Press Tax Guide for Investors
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.