The following article appeared yesterday in the Business
Section of our newspaper:

   "Often known by its acronym, FIFO, first-in, first-out is
   how the Internal Revenue Service treats the sale of
   securities unless you advise them to handle it
   differently.

   So, let's say that on every January 2 for the last three
   years, you purchased 100 shares of XYZ stock. The first
   year, your shares cost $20 each, the next $25, then $40.
   If the stock drops to $30 and you decide to sell 100
   shares, the IRS will believe you sold the first shares
   purchased, the $20 ones, creating a capital gain of $10
   per share, on which you owe taxes.

   By comparison, if you used “specific selection” and
   informed both your broker - or mutual fund company - and
   the IRS that this is the method you want to follow, you
   could sell the shares with the highest cost ($40),
   allowing you to report a tax loss of $10 per share and
   lowering your current tax burden. Generally speaking,
   specific selection or average cost basis accounting are
   better for investors than FIFO."
______

   I did not realize "specific selection" was an option we
   could utilize with the IRS. What are the pros and cons
   for its use with investments clubs?

Bob Hooper
New Pueblo Investment Club
Tucson, AZ