gains and selling mutual fund shares


D

Dave

I sold some shares of a mutual fund I own a few years ago.
At that time, I used the FIFO method for calculating and
reporting to the IRS. Now I want to sell more shares, and am
wondering if I am locked in to using the FIFO method from
now on for selling shares of this fund, or if I can change
to the (single-category) averaging method. Any accurate
advice is much appreciated.
 
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A

Arthur Kamlet

Dave said:
I sold some shares of a mutual fund I own a few years ago.
At that time, I used the FIFO method for calculating and
reporting to the IRS. Now I want to sell more shares, and am
wondering if I am locked in to using the FIFO method from
now on for selling shares of this fund, or if I can change
to the (single-category) averaging method. Any accurate
advice is much appreciated.
FIFO is one example of the method of specific identification
to determine cost basis of shares.

When you sell mutual funds you always sell specific shares.

You can use specific identification any number of times with
a mutual fund, and still preserve your right to use either
Type I or Type II cost averaging on a subsequent sale.

When you sell shares using either averaging method you
always sell oldest shares first.

Once you elect to use an averaging method to calculate cost
basis you must continue to use that method so long as you
own that fund.

In other words, when determining cost basis of mutual fund
shares, you can switch from specific ID to averaging but not
vice versa.

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
 
P

Phil Marti

I sold some shares of a mutual fund I own a few years ago.
At that time, I used the FIFO method for calculating and
reporting to the IRS. Now I want to sell more shares, and am
wondering if I am locked in to using the FIFO method from
now on for selling shares of this fund, or if I can change
to the (single-category) averaging method. Any accurate
advice is much appreciated.
You can always change TO averaging. Once you do, you must
use averaging for all future sales of that particular fund.
See Pub 551.

Phil Marti
Topeka, KS
 
H

Herb Smith

I sold some shares of a mutual fund I own a few years ago.
At that time, I used the FIFO method for calculating and
reporting to the IRS. Now I want to sell more shares, and am
wondering if I am locked in to using the FIFO method from
now on for selling shares of this fund, or if I can change
to the (single-category) averaging method. Any accurate
advice is much appreciated.
You are NOT locked in to using the FIFO or specific
identification methods, but if you change to the averaging
method (either singe- or double-category) YOU ARE required
to use that method on all subsequent sales from this fund.
 
A

A.G. Kalman

Dave said:
I sold some shares of a mutual fund I own a few years ago.
At that time, I used the FIFO method for calculating and
reporting to the IRS. Now I want to sell more shares, and am
wondering if I am locked in to using the FIFO method from
now on for selling shares of this fund, or if I can change
to the (single-category) averaging method. Any accurate
advice is much appreciated.
I seem to recall that the rule is as follows: You can use
cost (FIFO or Specific ID) or average cost. If you use
average cost, you are locked into that method. If you use
cost, you can subsequently change to average cost. Once you
change, you are locked into averaging.
 
A

Arthur Kamlet

Dave said:
I sold some shares of a mutual fund I own a few years ago.
At that time, I used the FIFO method for calculating and
reporting to the IRS. Now I want to sell more shares, and am
wondering if I am locked in to using the FIFO method from
now on for selling shares of this fund, or if I can change
to the (single-category) averaging method. Any accurate
advice is much appreciated.
FIFO is one example of the method of specific identification
to determine cost basis of shares.

When you sell mutual funds you always sell specific shares.

You can use specific identification any number of times with
a mutual fund, and still preserve your right to use either
Type I or Type II cost averaging on a subsequent sale.

When you sell shares using either averaging method you
always sell oldest shares first.

Once you elect to use an averaging method to calculate cost
basis you must continue to use that method so long as you
own that fund.

In other words, when determining cost basis of mutual fund
shares, you can switch from specific ID to averaging but not
vice versa.

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
 
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P

Phil Marti

I sold some shares of a mutual fund I own a few years ago.
At that time, I used the FIFO method for calculating and
reporting to the IRS. Now I want to sell more shares, and am
wondering if I am locked in to using the FIFO method from
now on for selling shares of this fund, or if I can change
to the (single-category) averaging method. Any accurate
advice is much appreciated.
You can always change TO averaging. Once you do, you must
use averaging for all future sales of that particular fund.
See Pub 551.

Phil Marti
Topeka, KS
 
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H

Herb Smith

I sold some shares of a mutual fund I own a few years ago.
At that time, I used the FIFO method for calculating and
reporting to the IRS. Now I want to sell more shares, and am
wondering if I am locked in to using the FIFO method from
now on for selling shares of this fund, or if I can change
to the (single-category) averaging method. Any accurate
advice is much appreciated.
You are NOT locked in to using the FIFO or specific
identification methods, but if you change to the averaging
method (either singe- or double-category) YOU ARE required
to use that method on all subsequent sales from this fund.
 

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