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.
How much investment income can children earn before paying taxes? Learn more from the tax experts at H&R Block.
Learn more about Form 8690 and the IRS net investment income tax from the tax experts at H&R Block.
With a new crop of investing apps like Robinhood, Acorns, Wealthfront, and Stash, some online investors are left confused on how to report to the IRS.
Learn more about tax exempt dividends and get tax answers at H&R Block.