That can raise tax because the oldest shares typically cost the least. IRS rules require that you give the fund written instructions and get confirmation. Ask your fund if it will do this. Fund holders who didn't sell shares last year may still have a taxable capital gain if the fund paid out long-term gains earned from trading stocks. But the distribution is taxed as a long-term gain even if you held the fund less than a year.
Losses hurt less.
If you clean out flops, the losses can lower your net gain from sales and cut tax. If you take miscellaneous itemized deductions, you may be able to include fees for investment advice and publications, and part of the cost of a computer used for research. Separately deductible may be interest on debt to buy stock. World Report Inc. All rights reserved.