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Posted by Dick Adams on July 19, 2008, 9:26 pm
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My stock trading has been limited buying in increments
and selling all as one transaction. Thus, it doesn't
matter if I was using FIFO, designated lots, or any
other method.
Right now I want to sell some partial lots of various
stocks. I'd like to use FIFO for one because it will
generate a long-term capital loss and designated lots
on another because it will create a minimum long-term
capital gain.
My question is may I pick and choose the accounting
method per stock or must I be consistent across stocks?
Dick
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Posted by Arthur Kamlet on July 19, 2008, 10:44 pm
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>My stock trading has been limited buying in increments
>and selling all as one transaction. Thus, it doesn't
>matter if I was using FIFO, designated lots, or any
>other method.
>
>Right now I want to sell some partial lots of various
>stocks. I'd like to use FIFO for one because it will
>generate a long-term capital loss and designated lots
>on another because it will create a minimum long-term
>capital gain.
>
>My question is may I pick and choose the accounting
>method per stock or must I be consistent across stocks?
No need to be consistent here.
Example:
Sell 100sh XYZ today using specific identification.
Tomorrow you sell another 100sh of XYZ, and neglect to
do any specific identification. By default, you have
sold the oldest shares, so they have been identified.
Had you asked about mutual fund shares, there is
a consistency rule that says once you use averaging for
a mutual fund, you stick with averaging so long as you have
that same fund, and need only stick to averaging for just
that one fund.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Dick Adams on July 20, 2008, 8:15 am
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>> ...
>> My question is may I pick and choose the accounting
>> method per stock or must I be consistent across stocks?
> No need to be consistent here.
Thanks, Art. That is what I thought.
> ...
> Had you asked about mutual fund shares, there is
> a consistency rule that says once you use averaging for
> a mutual fund, you stick with averaging so long as you
> have that same fund, and need only stick to averaging
> for just that one fund.
Not that I would ever expect logic and the tax code
coincide, but what is the reason for the consistency
rule for mutual funds?
Referring to a previous thread, is the bond amortization
rule similar to the mutual fund rule or does it apply to
all bonds?
Dick
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by joeu2004 on July 20, 2008, 2:02 pm
Please log in for more thread options On Jul 20, 5:15 am, rdad...@panix.com (Dick Adams) wrote:
> > Had you asked about mutual fund shares, there is
> > a consistency rule that says once you use averaging for
> > a mutual fund, you stick with averaging so long as you
> > have that same fund, and need only stick to averaging
> > for just that one fund.
>
> Not that I would ever expect logic and the tax code
> coincide, but what is the reason for the consistency
> rule for mutual funds?
This rule should make perfectly good sense to you,
especially if you track total basis instead of
per-share basis. Consider the following example.
You buy 100 shares at $1 and later buy 100 shares
at $10. The total basis is $1100.
Later you sell 100 shares with a total average
basis of $550, leaving a total of $550 basis in
the remaining 100 shares. But bases on FIFO order,
you actually sold the first 100 shares.
When you sell the remaining 100 shares, if you
used their actual basis, the $1000 total basis
would overstate the remaining basis.
Moreover, you would understate the total capital
gain, resulting in paying less tax unfairly.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Arthur Kamlet on July 20, 2008, 2:36 pm
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>>> ...
>>> My question is may I pick and choose the accounting
>>> method per stock or must I be consistent across stocks?
>
>> No need to be consistent here.
>
>Thanks, Art. That is what I thought.
>
>> ...
>> Had you asked about mutual fund shares, there is
>> a consistency rule that says once you use averaging for
>> a mutual fund, you stick with averaging so long as you
>> have that same fund, and need only stick to averaging
>> for just that one fund.
>
>Not that I would ever expect logic and the tax code
>coincide, but what is the reason for the consistency
>rule for mutual funds?
Because once you have used an averaging method for a fund,
you have contaninated the actual cost basis of all shares
of that fund.
Try it. You'll see that you can't go home again, so to speak.
>Referring to a previous thread, is the bond amortization
>rule similar to the mutual fund rule or does it apply to
>all bonds?
I believe it is an all or none election but don't quote
me here.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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