Due to a recent tax law change, a lot of the guesswork for computing capital gains on sales of securities has been removed from the equation.
Strategy: When it suits your purposes, use the “specific identification” method to identify shares of stock you intend to sell. This may produce a better tax result than the default first-in, first-out (FIFO) method.
Depending on your situation, you might even be able to turn what would otherwise be a taxable gain into a beneficial tax loss.
Here’s the whole story: When you sell securities, you must calculate your taxable gain or loss based on the difference between the sales price and your basis. Your “basis” is usually the acquisition cost plus broker commissions. Also, the basis must be adjusted for events like stock splits and mergers.
The resulting capital gain or loss is long term if you’ve held the securities for more than one year. Otherwise, it’s short term. For 2014, net lon...(register to read more)