Profit/Loss calculation in Taxable

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niceguy7376
Posts: 2959
Joined: Wed Jul 10, 2013 2:59 pm
Location: Metro ATL

Profit/Loss calculation in Taxable

Post by niceguy7376 »

Hi,
I am still learning about the Taxable investing since I started it with 5K last quarter.
Say I bought 10 Company X shares at 2.50 and at each 5c intervals till 2.20. All this happened in a week.
10 @2.5, 2.45, 2.4, 2.35, 2.30, 2.25 and 2.2
This would mean the avg price is 2.35 for those 70 shares acquired.

Now the share value got stagnated at 2.38. If I now sell all of them at 2.38, is it a net profit of 70 X 0.03 = $2.1?

My brokerage is at Fido (along with my retirement accounts) and I dont see a way to sell lower priced shares first or any other methods.
Affable at 50
Posts: 157
Joined: Fri Dec 27, 2019 2:34 am

Re: Profit/Loss calculation in Taxable

Post by Affable at 50 »

niceguy7376 wrote: Thu Jan 13, 2022 11:04 am Hi,
I am still learning about the Taxable investing since I started it with 5K last quarter.
Say I bought 10 Company X shares at 2.50 and at each 5c intervals till 2.20. All this happened in a week.
10 @2.5, 2.45, 2.4, 2.35, 2.30, 2.25 and 2.2
This would mean the avg price is 2.35 for those 70 shares acquired.

Now the share value got stagnated at 2.38. If I now sell all of them at 2.38, is it a net profit of 70 X 0.03 = $2.1?

My brokerage is at Fido (along with my retirement accounts) and I dont see a way to sell lower priced shares first or any other methods.
That $2.10 should be your net gain, however, you would actually have a mix of gains and losses across the six lots. If you repurchased shares of company x within 30 days, the capital losses would be disallowed and the amount added to the basis of the new shares.
Topic Author
niceguy7376
Posts: 2959
Joined: Wed Jul 10, 2013 2:59 pm
Location: Metro ATL

Re: Profit/Loss calculation in Taxable

Post by niceguy7376 »

Thanks Affable at 50.
So in this example, I made profit of $2.10

The short term gains ($4.2) and short term losses (-$2.1) would cancel each other out and leave me with short term gain of 2.10 for tax purposes.
Doctor Rhythm
Posts: 1223
Joined: Mon Jan 22, 2018 3:55 am

Re: Profit/Loss calculation in Taxable

Post by Doctor Rhythm »

niceguy7376 wrote: Thu Jan 13, 2022 11:04 am Say I bought 10 Company X shares at 2.50 and at each 5c intervals till 2.20. All this happened in a week.
10 @2.5, 2.45, 2.4, 2.35, 2.30, 2.25 and 2.2
This would mean the avg price is 2.35 for those 70 shares acquired.

Now the share value got stagnated at 2.38. If I now sell all of them at 2.38, is it a net profit of 70 X 0.03 = $2.1?

My brokerage is at Fido (along with my retirement accounts) and I dont see a way to sell lower priced shares first or any other methods.
You should be able to select specific shares to sell in a taxable account, whether at Fidelity or any other brokerage. It’s called the cost basis method. It says here
https://www.fidelity.com/customer-servi ... basis-info
that their default method is First In First Out and then gives instructions on how to change the method. Unless your situation is atypical, you’re better off changing the method to Specific (Tax) Lot identification.
Topic Author
niceguy7376
Posts: 2959
Joined: Wed Jul 10, 2013 2:59 pm
Location: Metro ATL

Re: Profit/Loss calculation in Taxable

Post by niceguy7376 »

Somehow, I dont see the "Specific Lot Identification"
When I click change, it shows different options with FIFO selected.
Others are
LIFO
High-Cost
High-Cost Long Term
High-Cost SHort term
Low-Cost
Low-Cost long term
Low-Cost short term
Tax Sensitive
Tax Sensitive Short-term

I am selecting Low-Cost and then a popup comes and says it is saved but the original page still shows FIFO
MrJedi
Posts: 1532
Joined: Wed May 06, 2020 11:42 am

Re: Profit/Loss calculation in Taxable

Post by MrJedi »

At Fidelity when you sell, it will give you the option to specify lots. The option you are seeing is just the default selection if you don't specify.

In fact you can change the tax lots after the sale up until the trade settles (2 trading days ETFs and individual stocks)
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