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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: OldAIMGuy who wrote (10047)	1/17/2000 6:43:00 PM
From: Saul Seinberg	Read Replies (2) \| Respond to of 18928

Hi Tom, Actually I was trying to focus on that part of a sale transaction where you specifically identify for your broker which shares you are selling and they confirm back to you that those were, in fact, the shares they sold. The method you describe is very similar to one I use, but unfortunately that is self-documentation and would probably not be acceptable to the IRS if one was audited. Of course, the IRS default for the sale of stock in the absence of adequate documentation is FIFO, so our methods would not be challenged or be of concern to you or I. However, should you have a situation where you want to sell the most recently acquired shares, rather than the oldest shares you own, then you need proper documentation (an e-mail or something in writing) FROM THE BROKER agreeing that the newer share lots you've identified for sale were the shares actually sold or you could lose the benefit of LIFO tax treatment. The reason I asked was that I presently have a situation for one holding where I tried to designate the most recently purchased shares for sale (LIFO), only to have the broker screw up the documentation part of the transaction. I was interested in finding out if you and your broker have a self-documenting method in place to cover such a situation and, if so, who that broker is. I try to use average cost for funds as you do, but often switch to a straight FIFO approach for some funds where the tax results favor that approach. Generally, I stick to the average method and let my calculator rest up for the really important computations. Still hoping for LIFO in the mile high foothills. Saul...