Re: Selling mutual fund shares

From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Selling mutual fund shares
Date: Sun, 10 May 1998 16:55:09 -0400

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>When I sell mutual fund shares I realize it is best to sell the
>shares I paid the highest price for in order to show the smallest
>profit and incur the least taxes.  I do have records of what I paid
>for all shares I bought but what happens to shares the fund
>itself bought for me and reinvested?

First, have you already sold the shares?  If so and you didn't tell
the broker/fund company anything, it's too late to do what you
want to do.  When selling specific shares, you must designate the
shares to be sold AT THE TIME OF SALE.  You *cannot* do it after
the fact.

Second, assuming you've kept your year-end statements (which usually
show all transactions in the calendar year), you *do* know what cost
was for shares purchased via distribution reinvestments.  Remember
that shares purchased via reinvestments are treated *exactly* the
same as shares that you purchased by sending money to the fund.

So, if you haven't sold the shares yet and want to use specific ID,
figure out what shares you want to sell.  Then contact the broker/
fund company and tell them that you want to sell N shares versus
X shares purchased on M1/D1/Y1, W shares purchased on M2/D2/Y2 and
so on.  The broker/fund co must note these instructions on the
confirmation slip they send you, or send a letter acknowledging
these instructions cotemporaneously with the confirmation slip.
There are those that say that merely sending the order in writing
to the broker/fund company is enough to satisfy the IRS rules, 
but I am not convinced of that.

Rich Carreiro
rlcarr@animato.pn.com
P5-100/RedHat Linux 4.1

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