stock tax reporting methods

[tulog]

Any opinions on which of these stock reporting methods is preferable. What criteria do you use to decide which to use?


"Cost Basis Tax Lot Accounting

Beginning in 2011, the Internal Revenue Service requires that the method to be used for tax accounting for sales of securities be reported by the clearing firm at the time the trade is made. The default method is FIFO (see below) for all accounts. You may use this section to specify the default accounting method to be used when a position is closed. This method is also changeable on a per-trade basis when placing an order. The table below explains briefly the different accounting methods which can be used. For more information on the tax implications of each, we recommend that you contact your tax professional.

FIFO The tax lot with the earliest open date will be closed first, regardless of the cost.
LIFO The tax lot with the latest open date will be closed first, regardless of the cost.
HIFO The tax lot with the highest cost will be closed first, regardless of the holding period.
HCLT The process will pick only the long term tax lots and the tax lot with the highest unit cost wll be closed first.
HCST The process will pick only the short term tax lots and the tax lot with the highest unit cost wll be closed first.
LOFO The tax lot with the lowest cost will be closed first, regardless of the holding period.
LCLT The process will pick only the long term tax lots and the tax lot with the lowest unit cost wll be closed first.
LCST The process will pick only the short term tax lots and the tax lot with the lowest unit cost wll be closed first. "

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Any opinions on which of these stock reporting methods is preferable. What criteria do you use to decide which to use?


"Cost Basis Tax Lot Accounting

Beginning in 2011, the Internal Revenue Service requires that the method to be used for tax accounting for sales of securities be reported by the clearing firm at the time the trade is made. The default method is FIFO (see below) for all accounts... For more information on the tax implications of each, we recommend that you contact your tax professional.

The ones with High cost, will sell the ones with with smallest gain - which is good if you have a high income, bad if you have a low income.

The FIFO will sell long term holdings before short term (if applicable), better for higher income, decent for lower income.

LIFO will sell shorter term holdings before long term (if applicable), better for low income than high income.

As you can see, each method has different tax implications and it varies by your specific tax situation. You really need to speak to a tax professional about which method would be best for you...