How to get rid of fractional shares

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n00b_to_investing
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How to get rid of fractional shares

Post by n00b_to_investing »

I recently switched to "specific id" for cost basis & stopped dividend re-investment for may taxable account. However, there are a few tax lots with fractional shares that I was hoping to sell. Wondering if there is a way to do so
livesoft
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Re: How to get rid of fractional shares

Post by livesoft »

Are these ETF fractional shares or mutual fund fractional shares?

Contact your broker if these are ETF fractional shares. I think Vanguard BS wants you to sell all shares and then it will toss on the fractional shares, too. For instance, if you sell 607 shares VCSH in a holding of 607.349 shares, place an order to sell 607 shares and all 607.349 will be sold.

If these are mutual fund shares, just sell 0.349 shares of the mutual fund and specify the lots. You may need to do this in several transactions if the 0.349 shares are really 0.123 from one lot, 0.092 from another lot, and 0.134 from yet another lot. One does not need to sell an entire lot when specifying a trade.

If in doubt, call up the broker and express your wishes.
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22twain
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Re: How to get rid of fractional shares

Post by 22twain »

livesoft wrote:Contact your broker if these are ETF fractional shares. I think Vanguard BS wants you to sell all shares and then it will toss on the fractional shares, too. For instance, if you sell 607 shares VCSH in a holding of 607.349 shares, place an order to sell 607 shares and all 607.349 will be sold.
I think this is how it worked with my T. Rowe Price brokerage account, about a year ago: I placed a sell order for the integer number, which went through as usual and was settled after three days, leaving me with the fractional share. Then, the fractional share was automatically liquidated. I don't remember whether the proceeds turned up immediately in my sweep account, or went via the cash account and a (second) three-day settlement period. Either way, I got the money automatically.
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The Wizard
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Re: How to get rid of fractional shares

Post by The Wizard »

WHY exactly is the OP concerned about owning fractional shares?
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livesoft
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Re: How to get rid of fractional shares

Post by livesoft »

It's probably a personality trait. I will guess that when they fill up their gas tank, they end on a integer dollar amount, too.
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caliguy1
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Re: How to get rid of fractional shares

Post by caliguy1 »

Is there a problem longer term with owning fractional shares? e.g. from an accounting standpoint its less clean.

I did the same thing as the original poster on Vanguard where I forgot to turn off DRIP so I ended up with a fractional share, and when I rebalanced and sold some shares it kept a fractional share. Vanguard brokerage services said you can't just sell a fractional share and the only way to get rid of it is to sell all shares. But I don't want to sell all shares because I don't want to realize cap gains and restart my holding period. And I want to hold these shares for 30+ years so I hope there isn't a problem down the road. It just feels slightly less clean from an accounting & possibly tax standpoint to have fractional shares. I heard also that fractional share is actually just an internal record at the brokerage, so it just doesn't feel as clean & simple.

Also, I'm using specific lot.

Thanks.
livesoft
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Re: How to get rid of fractional shares

Post by livesoft »

I don't see a problem. We have some fractional shares from ages ago that will likely not change in the next 10 years because that account is now in "set-and-forget" mode with no selling and certainly no selling down to 0 shares.

I do appreciate the comment about "doesn't feel as clean" because I often want to buy more shares just to get to a round number of shares ending in lots of zeroes. :)
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Epsilon Delta
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Re: How to get rid of fractional shares

Post by Epsilon Delta »

Good grief.

If you must show prejudice towards numbers, couldn't you at least reserve it for those that are unreal instead of just unnatural?
kaneohe
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Re: How to get rid of fractional shares

Post by kaneohe »

Having fractional shares (x.abc) shares is normal when you buy mutual fund shares with specific $$$ amounts. Can you even specify
buying a specific number of shares?
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22twain
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Re: How to get rid of fractional shares

Post by 22twain »

Epsilon Delta wrote:If you must show prejudice towards numbers, couldn't you at least reserve it for those that are unreal instead of just unnatural?
Imaginary shares? Wasn't that Bernie Madoff's specialty?
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gd
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Re: How to get rid of fractional shares

Post by gd »

22twain wrote:
Epsilon Delta wrote:If you must show prejudice towards numbers, couldn't you at least reserve it for those that are unreal instead of just unnatural?
Imaginary shares? Wasn't that Bernie Madoff's specialty?
Multiply it by itself and, whoops, it's negative!
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samsoes
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Re: How to get rid of fractional shares

Post by samsoes »

Epsilon Delta wrote:Good grief.

If you must show prejudice towards numbers, couldn't you at least reserve it for those that are unreal instead of just unnatural?
...or numbers that are imaginary like i ?
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grabiner
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Re: How to get rid of fractional shares

Post by grabiner »

When selling a mutual fund, you can sell an entire lot by specific ID, even if it includes fractional shares. If you sell a dollar amount, this will be converted back to fractional shares when the sale is made.

When selling a stock or ETF, you can't sell fractional shares because they aren't traded on the market. If you have a fractional share left after selling all your shares, the brokerage will convert it to cash automatically.

And I don't think Vanguard allows you to specify a lot of fractional shares even in a whole-share total. I noticed this when I made a charitable contribution from an ETF which was converted from a mutual fund. Vanguard's form says "whole shares only". The current contribution fit all in one lot, but the next one won't. I have 43.4105 shares left in my lowest-basis lot, which is the one I use for contributions. If I want to contribute 100 shares in my next contribution, I would like to contribute all of that lot and 56.5895 shares from another lot, to simplify accounting, but I'm not sure Vanguard will let me do that.
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