Simple stock question

[FP]

Let's say I do the following:

Day 1: Buy 1 share of stock ABC @ $10/share.
Day 2: Shares of ABC go up to $20/share.
Day 3: Buy 1 share of stock ABC @ $20/share.
Day 4: Shares of ABC go down to $15/share.
Day 5: I sell 1 share of ABC for $15.

At Day 4 my total outlay is $30 and my total holdings equal $30.

However I have a gain on my first share and a loss on my second share.

When I sell on day 5, which share does my brokerage sell? Does it matter? What are the tax implications? Did I make money on the sale or lose money on the sale?

 

[stevens]

The general rule is "first in first out". You need to specifically tell your broker to sell the shares that lost you money in order to be able to write them off as a capital loss on your taxes. If not, you sell the shares that made you money, and you have to report that as a capital gains. I am by no means an expert, but to my understanding that is how it works.

 

[JS80]

Originally posted by: stevens
The general rule is "first in first out". You need to specifically tell your broker to sell the shares that lost you money in order to be able to write them off as a capital loss on your taxes. If not, you sell the shares that made you money, and you have to report that as a capital gains. I am by no means an expert, but to my understanding that is how it works.

Basically what this guy says. FIFO unless you call the broker to specift what to sell BEFORE you sell it. You can't call him tomorrow and be like yea I want those shares I sold last week to be LIFO.

 

[FP]

Ok, so on sites like Ameritrade and E-Trade, when you want to sell do they have an interface that lists all the purchases you have made that you select from?

 

[JS80]

Originally posted by: binister
Ok, so on sites like Ameritrade and E-Trade, when you want to sell do they have an interface that lists all the purchases you have made that you select from?

No. Generally you have to call the broker.

 

[OdiN]

I thought computers were the only thing with FIFO's...meh

 

[FP]

Originally posted by: JS80

Originally posted by: binister
Ok, so on sites like Ameritrade and E-Trade, when you want to sell do they have an interface that lists all the purchases you have made that you select from?

No. Generally you have to call the broker.

So how do they determine which shares to sell when you want to sell?

Do they generally use the same rule (FIFO, etc)?