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Keith Hoile
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| 05/22/2008 9:29 PM |
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My wife's club bought SBUX on two occasions; then it split. Subsequently they purchased more shares, giving them 100 total shares. Finally they sold 50 of the 100 shares. Her question to me (since I'm the treasurer of my club I should know this!) is: can they select which 50 shares they sold in order to affect the capital gain (loss)? Their club accounting software (Bivio) sold 18 shares in one lot and 32 in another, each having a different cost basis. My club uses CAO so I'm not much assistance. Can anyone answer this question?
Thanks,
Keith Hoile, Viking Investment Club Treasurer
P.S. What do these message icons signify?
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rip west
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| 05/22/2008 10:02 PM |
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According to IRS regulations, if you want to select
specific shares to be sold in any way other than First-In, First-Out, you must
identify the shares to your broker before selling, and get written confirmation
from him that he has received your instructions. No matter if he is unable to
sell those specific shares. If he acknowledges receipt of your instructions, you
are in the clear.
Both bivio and Club Accounting allow you to select which
block of stock to use. In the absence of such selection, both programs default
to FIFO.
If it is not clear from the above, your wife is
stuck with FIFO, since specific instructions were not given before the
sale.
Rip West
Saint Paul, MN
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Gene Rooks
Gotha, FL (W. of Orlando)
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| 05/22/2008 10:07 PM |
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Keith, if you are going to select for tax purposes
stocks different than first in, first out, which is the default in the
accounting software, at least in CAO, you must advise your broker at the time of
the sale that this is your intention. It doesn't matter what he does, but
it does matter that you notify him in writing. Then, when entering
the sale in the software, you need to specifically select the blocks you intend
to sell, overriding the default.
There very well may be different costs, as each
block selected, or part of a block, will have its own cost basis. You
should then be able to verify the transaction by running an Individual Security
Ledger report on that security.
Your tax program will assign capital gain correctly
to the blocks you have selected.
Gene Rooks, Space Coast
Chapter
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Gene Rooks, Director
Space Coast Chapter
Accounting Instructor |
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Keith Hoile
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| 05/22/2008 10:14 PM |
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Thanks, Rip and Gene, for the prompt, helpful responses. Best/Keith |
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