A.I.M. Users Bulletin Board

[ls7550]

RE : LIFO and FIFO

In the UK for tax reporting purposes we use average cost, and in some circumstances are permitted to utilise FIFO, but not LIFO.

Generally with LIFO the older shares will be lower priced, so selling later dated shares is a form of deferred tax when you account on a LIFO basis. A form of zero cost 'loan' from the taxman as Buffett likes to describe deferred taxes.

So generally yes, LIFO is better for taxable accounts.