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You have to keep track of how many shares you bought at what price. Unless you jump through quite fancy hoops directing that different shares be sold, first in, first out applies.

This isn't really onerous, though. Since a ST bond fund is just a type of mutual fund, you can (and I think most people do) just use the average basis method to calculate your capital gains. A first-in, first-out calculation is used to determine whether a gain is short-term or long-term, but the basis (if you use the simplest, single-category method) is just the total amount you've put into the fund, divided by the total number of shares you own before the sale, times the number of shares you've sold: in other words, you calculate the average cost of a share, and figure that all the shares are worth that.

This is pretty easy math, and I think most mutual funds do the dirty work for you and just tell you what your average cost basis is. It's all outlined in IRS publication 564 if anyone's curious.
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