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Specific-Identification Method

If you don't specify your shares prior to selling them, the IRS will assume you used the first-in, first-out method. However, you can choose to use the specific-identification method. If you do, you can identify the actual shares you want to sell. This might minimize your capital gain or maximize your loss.

The price of the stock or mutual fund shares you're selling might have fluctuated over the years. If so, using the specific-identification method could decrease the amount of tax you’ll owe. Base your decision on your tax situation.  

To use this method:

  1. Prior to or at the time of the sale, you must specify to the fund company or your broker exactly which shares you want to sell.
  2. You must receive written confirmation from the fund company or your broker within a reasonable time. This confirmation will tell which specific shares you want to sell or transfer.

 

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