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Old 07-20-2015, 11:37 AM
 
78 posts, read 95,274 times
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Hi,

I purchased 500 shares of AAPL last October and recently added another 500 shares. I need to cash out everything by November of this year to buy a house. I want to sell 500 shares in a few days for short-term gain and then 500 shares in November for long-term gain, will there be any confusion about which shares I will be selling? Can they say that I would be selling the 500 shares I bought in October now and then the 500 shares I will sell in November are the shares I recently bought and so I would be paying short-term gain tax on everything. Could you please explain.

Thanks,
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Old 07-20-2015, 11:39 AM
bUU
 
Location: Florida
12,081 posts, read 8,915,567 times
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When you sell you can specify which lot you're selling from.

If the price of the stock changes differently than you expected after your first sale, you cannot change your mind later about which lot that sale came from.
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Old 07-20-2015, 12:05 PM
 
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The method that your broker uses to calculate capital gains is the "FIFO" method meaning "first in first out." Since your purchases are recent, your broker must calculate the capital gain or loss and report it to the IRS. If you sell 500 shares now, your broker will use your October purchase and the gain or loss will be short term. If you sell the rest in November, your broker will take your most recent purchase and it will also be recorded as a short term gain or loss.
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Old 07-20-2015, 01:08 PM
 
Location: The Pacific NW.
879 posts, read 1,791,224 times
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Quote:
Originally Posted by Wells5 View Post
The method that your broker uses to calculate capital gains is the "FIFO" method meaning "first in first out." Since your purchases are recent, your broker must calculate the capital gain or loss and report it to the IRS. If you sell 500 shares now, your broker will use your October purchase and the gain or loss will be short term. If you sell the rest in November, your broker will take your most recent purchase and it will also be recorded as a short term gain or loss.
FIFO is the default option for most brokerages, but like bUU said, you can designate which shares you want to sell beforehand. So Jimmy could sell the most recent purchase first for a short-term gain, and sell the longest-held shares in November for a long-term gain.
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Old 07-20-2015, 04:31 PM
 
3,809 posts, read 3,292,734 times
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Quote:
Originally Posted by LongArm View Post
FIFO is the default option for most brokerages, but like bUU said, you can designate which shares you want to sell beforehand. So Jimmy could sell the most recent purchase first for a short-term gain, and sell the longest-held shares in November for a long-term gain.
You're right. Sorry. I rarely ever sell stocks that I've owned under 1 year so never had to choose lots. With long term gains, the brokerage always uses FIFO so I assumed that it is the same with short term. Is it possible to choose lots when all gains from various purchases of the same security (including mergers where you received "cash in lieu" for fractional shares) are long term?
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Old 07-21-2015, 05:39 AM
bUU
 
Location: Florida
12,081 posts, read 8,915,567 times
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Each lot acquired is recorded separately and that lot distinction is maintained and can be capitalized on for specific shares identification in sales any time in the future. Even when I'm selling shares with long-term gains I sell specific shares, either maximizing or minimizing my gain (i.e., never FIFO or LIFO unless that's a coincidence) depending on my personal taxes situation at that time and other sales I may have made that year.
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Old 07-21-2015, 11:08 PM
 
78 posts, read 95,274 times
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Just like that my $10k in aapl stock has gone up in smoke. It's painful. I am still up $7k. I might just keep them all until November.
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