2 accounts same stock. What is my cost basis

Forum|Forum|2 years ago
December 4, 2023
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I have the same stock under 2 different accounts. One is being sold with a profit, the other with a loss. Does the cost basis act per account combined average or are they separate buckets?

Mike9241

assuming both accounts are fully taxable, ie neither is a retirement account, separate buckets based on what each account has as the tax basis. sale at a loss could trigger the wash sale rule if shares on the gain side or shares still held were purchased within 31 days of the loss sale (either before or after).

mau3535Author

Thank you Mike. So to clarify and confirm. Both are regular taxable brokerage accounts. So I am more interested in only selling the bucket that has a positive gain. The account that is losing will be held until it comes back which will be greater than 30 days from now. So in essence, the bucket that has the gain will use the cost basis for that specific account, correct?

Mike9241

your previous post suggested both gain and loss shares would be sold. however, just selling the gain shares can create an issue.

there is a methodology that you probably have previously established for which shares are sold. generally, you selected either FIFO - the first shares bought are the first shares sold (the usual default method with brokers if LIFO is not selected) or LIFO - the last shares bought are the first shares sold.

so if you sell the gain shares, depending on the methodology:

if FIFO you would use the first shares bought even if in a different account

if LIFO you would use the last shares bought even if in a different account.

The IRS doesn't care that they are in different accounts.

so the 1099-B you get may be incorrect.

the broker will most likely report what they have as the tax basis for the shares sold. you may need to adjust this when doing your 1040.