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Microcap & Penny Stocks : FRANKLIN TELECOM (FTEL)
FTEL 0.406-21.1%Jan 6 3:59 PM EST
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To: STK1 who wrote (35314)6/27/1998 6:07:00 PM
From: David Colvin  Read Replies (1) of 41046
 
Charles,

first in first out is the way it should look to the IRS if you can prove it.

I'm not so sure about that. I keep track of each "tax lot" in Quicken for everything I buy and sell...both equities and mutual funds. I know for a fact that the IRS does not require you to follow a FIFO (first in first out) regimen at all. As long as you can identify specific shares within a particular tax lot to buy or sell, you can do anything you want to do if it is to your advantage. All my buys and sells are further backed up by brokerage statements. If it is to your advantage to sell shares you paid $4.50 for at $2.50 and keep shares you bought at $1.00 the IRS could care less as long as you can keep track of all those shares.

I rely on Quicken to tell me my average cost per share for anything I've purchased or sold multiple times. I'm guessing that most people cannot tell you what their cost basis is for a mutual fund they've held for ten years...too many dividends, capital gains distributions, etc.

But back to Snake's question. If he bought shares today for $2.50 and could identify shares he paid $4.50 for and sold them tomorrow, I'm not sure, from a practical standpoint, the IRS wouldn't still interpret that as a "wash" sale because both events occurred within thirty days of each other, even though he sold first and bought second. I can just see the IRS note to him saying "nice try" but you can't claim the loss. I certainly wouldn't try it before consulting a professional who could tell me with certainty.

Dave
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