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.
1. Any citation for that rule? A quick search, at least, didn't turn up a
2. 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. So I don't have any idea about the interplay between IRAs and taxable accounts in the context of average basis accounting.
- posted 11 years ago