Submitted By: Kathy
Answered: December 9, 2015 11:47 am

Can I use the specific identification method for the sale of stock this year even though I used FIFO for sales of the same stock in the past?

Yes. The specific identification method allows you to use the cost basis of the shares you sell to figure your gain or loss. FIFO, or first-in, first-out, is the default method for figuring basis if you do not instruct your broker or agent to use the specific identification method. You can override FIFO at any time buy giving directions to your broker; get a written confirmation that you are using the specific identification method.

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Tax Glossary

Self-employment tax

Tax paid by self-employed persons to finance Social Security coverage. In 2007, there are two rates. A 12.4% rate applies to a taxable earnings base of $95,700 or less and a 2.9% rate applies to all net earnings.

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