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Is this stock matching allowed?

Hello,

I have heard that stocks are sold in a first in first out (FIFO) order. I also heard that you can specify the order to override the FIFO order. I have this contrived case:

2003-09-15 bought 200 shares of XYZ, cost 3080.05 2004-08-20 bought 200 shares of XYZ, cost 3480.05 2004-08-31 sold 200 shares of XYZ, proceeds 3520.05 2004-12-27 sold 200 shares of XYZ, proceeds 3680.05

If I use FIFO, then both sales are less than one year and the two gains are considered short-term. However, if I specify that the first 200 shares sold were bought on

20040820, then the second sale is matched with 20030915 and that gain can now be considered as long-term since it is held for more than a year. I am wondering whether this non-FIFO match is allowed by the tax law. Your answer is appreciated. Caihong

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Reply to
cahzhao
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Yes, it's allowed, as LONG as you do the matching at the time of sale and not posthumously. ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

You mean I can't specify the shares in my will?

-- Barry Margolin, snipped-for-privacy@alum.mit.edu Arlington, MA

Reply to
Barry Margolin

That would be a neat trick!

-- Alan

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Reply to
A.G. Kalman

Note: the OP asked about a sale, and not about shares inherited. That said, but of course you may specify which shares to whom in your will. Or does that matter? Do they get stepped up basis anyway? If so, DO specify and let the legatees and their tax pros wonder just what the heck was meant by that. ChEAr$, Harlan Lunsford, EA n LA Tue 8 Mar 2005

Reply to
Harlan Lunsford

I know. I was making a joke on the previous poster's misuse of the word "posthumously", when he meant "post facto".

-- Barry Margolin, snipped-for-privacy@alum.mit.edu Arlington, MA

Reply to
Barry Margolin

Replace that "dead" word "posthumously" and substitute.

ex post facto . Is that right?

ChEAr$, posting this humourously, Harlan Lunsford, EA n LA Wed 9 Mar 2005

Reply to
Harlan Lunsford

While humor is 'allowed' in the newsgroup, it is a Very Serious news group and we are not easily amused!-) Moderator: I was amuse because it surprised me that Harlan's vocabulary was so extensive.

Reply to
Rick Merrill

Had I not been so amused at your seeing the error of your ways, I might have been insulted, Dick. And if you believe that, Rick, I've got some Net2phone stock I'll sell you; cheap. But Seriously, taxes is/are the major subject here, and while we do get down to the nitty-gritty much of them time, there's no reason we can't have a laugh or two once in a while. After all, if you're crazy enough to be IN this business, you need all the help you can get this time of year. ChEAr$, Harlan Lunsford, EA n LA Sun 13 Mar 2005

Reply to
Harlan Lunsford

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