First in, first out method
This method is available for all types of investments, and it's the one we'll use for all investments other than mutual funds.
How it works
The shares you bought first will automatically be the first shares we sell. It will appear on your statement as FIFO.
Why you might prefer the first in, first out method
It's easy to understand
Shares are sold in the same order they were bought—it's that simple.
You can be hands-off
You don't need to hand-select which shares to sell because we'll automatically sell the oldest shares first.
A few things to consider
It could be less tax-efficient
If you're hoping to minimize your taxable gains—or maximize your tax losses to offset gains—this may not be your best choice. You'll have no control over the gains and losses realized on a sale.
Gains & losses depend on the markets
If the value of your shares has appreciated significantly, you could end up with a large capital gain. And vice versa: If share prices have dropped, you could end up with a substantial loss.
More recordkeeping may be required
You'll need to keep detailed records of your adjusted basis for noncovered shares, including adjustments made for purchases and sales of mutual fund shares. We won't report cost basis for those shares to the IRS—but we will report it to you, and you'll need those records to verify that what you eventually report to the IRS is correct.
Shares bought before the regulatory changes took effect on January 1, 2012 (or January 1, 2011, for stocks).
Cost basis reporting for noncovered shares will be sent to you alone; it will not be sent to the IRS.