AboutJay Kay Expertise As a private investor for the past 40 years, I have experienced both bull and bear markets, and have lived to tell the tale. I should be able to provide you with serious, practical insights into managing stocks, bonds and mutual funds in your portfolio, along with useful information concerning most aspects of personal finance. No specific stock/bond recommendations furnished.
Question Is there a rule that prescribes how a sale of stock is applied against current holdings to determine a gain or loss? For expample: I buy the same particular stock: 100 shares on day 1 at $10; 100 share on day 3 at $11; 100 shares on day 5 at $12. On day 7 I sell 200 shares at $11. Can I arbitrarily apply the sale against the purchases at $11 and $12 and therefore claim a loss or must I apply the sale against the stocks in the order that I buy them? Where is this information found?
Answer In order to have the sale apply to a particular purchase (or purchases), you instruct your brokerage to have the sell order state that the transaction is for the sale of shares purchased on _________ (the date of your purchase). Without such information, the last-in/first-out rule applies: i.e., it will be assumed that the sale is of the most recently-purchased shares.
