According to Pub 564, once one selects an average basis method for a particular fund, one must continue using that method until the IRS gives its approval to change it. Most everyone believes that if one liquidates all positions in a given fund (possibly in multiple accounts), then one can start over with whatever method one chooses when one starts a new investment in that fund.
- Any citation for that rule? A quick search, at least, didn't turn up a source.
- Does one have to liquidate IRA accounts as well? One might think not, but early this year the IRS put out a Revenue Ruling on wash sales, that says that the wash sale rule applies (admittedly, a different rule) even if one sells in a taxable account and repurchases in an IRA. Revenue Ruling
2008-5.
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So I don't have any idea about the interplay between IRAs and taxable accounts in the context of average basis accounting. Mark Freeland snipped-for-privacy@nyc.rr.com