An averaged basis that you use when you sell lot A combines the actual basis of lot A with the actual bases of other lots B, C, D, etc. If later you want to sell lot B, what sensible method would you use to assign a non-averaged basis of lot B? In essence you used some of lot B's actual basis earlier when you sold lot A. And at that time you did not fully account for lot A's actual basis.Locked in forever? Why could you not change it?If you care about making the right selection, you absolutely do not want "average cost," because then all the shares you own now will be locked into "average cost" forever. (Warning: you may have to select your desired basis method one or more business days before you actually request the transaction.)
You might hope that you would be allowed to use the actual average basis of lot B and ignore the fact that you used an averaged basis for lot A. But that would invite mutual-fund owners to use actual basis for high-cost lots and averaged basis for low-cost lots, and so evade paying tax on a portion of their actual profits.
Statistics: Posted by increment — Thu Oct 17, 2024 11:40 pm — Replies 16 — Views 639