I can't remember what cost basis I previously used to report capital gains on a stock. I have new sales to report. FIFO or Average. How can I find out which one I used?

Forum|Forum|3 years ago
March 29, 2023
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I don't see the method I used on previous returns. I'm stumped.

TurboTax Online

ThomasM125

The method you used to determine the cost basis of investments sold would not be reported on your tax return. I suggest you look on the last return that you reported sales of those securities on and see if you can discern how you determined the cost basis, based on what was reported on the Form 1099-B and your records for the investment purchases and what you listed on the tax return. Then, choose a costing method that is consistent going forward.

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High-PlainsAuthor

Thanks Thomas. Its my understanding the the IRS wants you to pick a calculation method and stick to it. I think I've read that it you change methods you must make a request in writing to the IRS.

But, are you saying that the IRS doesn't really know what method I used?

DavidD66

When you sell individual stocks, you can choose the specific shares you want to sell. Most brokers provide you choices such as Minimum Tax, Specific Identification, Highest In, First Out, First in, First Out, and Last in, Last Out. You set a default method with the broker, or let them know on a trade by trade basis prior to settlement. If you don't select a method, they have a default - usually First In, First Out. Except for certain mutual fund shares, discussed below, you cannot use the average price per share to figure gain or loss on the sale of the shares.

For Mutual Funds, the broker and mutual fund default is Average Cost Method. If you did not previously use an average basis for a sale, exchange, or redemption of other shares in the same mutual fund, you can choose one of the following: methods.
• Specific share identification.
• First-in first-out (FIFO)

To make the election to use the average basis method for your covered securities, you must send written notice to the custodian or agent who keeps the account. This isn't necessary if they use it as their default. You must send written notice to the custodian to revoke the election to use the average basis method.

I recommend you contact your broker to determine what cost basis you used for prior sales, and what options you have for future sales.

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