Post-execution re-assignment of tax lots??

Sometime pretty recently a "Reassign Lots" option has popped up in my Fidelity account. When I click on it, I get a page showing unsettled transactions with this verbiage at the top:

The Reassign Lots functionality allows you to modify the lots depleted on individual trades that have executed but not yet settled. Fidelity generally uses your account level default disposal method to identify the lots depleted on closing trades.

**By reassigning lots, you may more carefully manage the performance and tax implications of your trading activity.** [my emphasis] Modifications can be made up to 9:00 PM ET on the trade settlement date.

Click on the Edit Lots link to access a list of available lots for the selected trade's position.

Each trade can be modified once. Subsequent changes must be made through a Customer Service Representative up until 9:00 PM ET on the trade settlement date.

I thought you had to pick at time of sale, not after the fact, so how is this possible? Or do the specific ID regulations actually let you choose up to the time you actually lose possession of the stock -- i.e. settlement day? Or (and not for the first time!) has a brokerage botched its interpretation of tax law?

Reply to
Rich Carreiro
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I think they're just interpreting it creatively. If the transaction hasn't yet settled, they're essentially letting you cancel it and start over, this time specifying the lots.

Reply to
Barry Margolin

I don't think it's "creative" at all. If you were executing a trade using shares that you had physical possession of, you would have to deliver the physical shares at the end of the settlement period. You could choose which shares to deliver right up to the point where you made delivery. The broker has to do the same thing. I see no reason why the broker needs a binding designation of shares at the time the order is placed and not simply at some time before he has to deliver them to the buyer.

Ira Smilovitz

Reply to
ira smilovitz

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