Most people simply say how many shares they want to sell. But by identifying which specific shares are to be sold, you may be able to save some tax. If you decide to sell a portion of your holdings in a particular stock or mutual fund, you may be able to minimize the tax bite by instructing your broker or fund manager which specific shares to sell.
Most people simply say how many shares they want to sell.
But by identifying which specific shares are to be sold, you may be able to save some tax. If all your holdings in a particular stock or mutual fund were acquired at the same time and at the same price, it won't matter which shares are sold. But if the shares were purchased at different times and different prices, which shares you choose to get rid of can make a big difference in your tax bill especially on large sales. If you don't instruct your broker or fund manager which specific shares to sell, the IRS will make you assume on your tax return that the first shares you acquired were the first shares sold. In order to minimize your taxable gain, you'd generally need to instruct your broker or mutual fund to sell the shares you acquired at the highest prices.