Regarding FIFO vs. Avg. Cost Basis on Funds

iras1 on

Almost, but not quite. If you used average cost basis for mutual fund shares which you sold prior to 2012, you have (had) to continue to use average cost basis. If you sold some shares using FIFO or specific lot identification, you can switch to average cost basis for the remaining shares.

Basically, it's a one way street. You can always go from identifying specific shares to an average method, but you can't go from an average method to a specific share method.

Ira Smilovitz

In a message dated 2/7/2012 12:13:23 P.M. Eastern Standard Time, laurie@bivio.biz writes:

No. Not for shares you have purchased starting in 2012.

So if I've never sold any shares of mutual fund owned prior to Jan 1, 2012 but sold after Jan 1, 2012, I should be able to use a different accounting system for each account that holds that particular mutual fund, correct?

This is where it gets really complicated with mutual funds. In the past, once you sold some shares, whatever cost basis method you used to determine your gain or loss was the one you had to stick with for subsequent sales unless you applied to the IRS and had a good reason to change. Any sale affected all the shares of the same fund you held in all your accounts.

Mail