A stockholder who purchases stock on different dates or with different prices and then sells a portion of the stock may use a number of methodologies to determine the basis and holding period for the shares sold. One method is “first in first out,” with the shares sold being deemed to have been from the earliest lots acquired for purposes of determining the amount of gain or loss and the holding period.
Alternatively, if the lots from which the stock was sold are adequately “identified” at the time of the sale, the shares specifically identified will be considered to be the shares sold. Finally, owners of shares in a regulated investment company (“RIC”) such as an open-end mutual fund have long been permitted to use various methodologies under which basis is determined by reference to the taxpayer’s average basis in all shares owned in the fund.
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