First In, First Out Method

 

This is the default method to figure shares you sold if both of these apply:

  • You held your shares in a brokerage account.
  • You didn’t specify a method when you sold your shares.

With the first-in, first-out method, the shares you sell are the first ones you bought. Since the market usually goes up over time, you’ll get a bigger gain by selling shares you bought using the first-in, first-out method. You might have held the shares for various lengths of time. If so, you might get favorable long-term capital gains treatment by selling the shares you bought first.

If you want to sell shares other than these, you must identify the shares in writing before the sale. The broker must also send you a confirmation that those shares will be sold.

Related Topics

Related Resources

What Is the Secure Act and How Will It Affect Your Retirement Savings?

In this article, the tax experts at H&R Block will walk you through the Secure Act retirement bill and any changes that may affect your retirement savings.

Reporting Rental Income on Tax Return

Renting property comes with extra tax reporting. Learn what you need to know about reporting rental income on your tax return from the experts at H&R Block.

Special Cases – Mutual Funds

Learn more about receiving a short-term mutual funds loss, from the tax experts at H&R Block.

Reporting 401K Rollover Into IRA

Learn more about rolling your 401K into an IRA with help from the tax experts at H&R Block.