A.I.M. Users Bulletin Board

[OldAIMGuy]

Hi TAB, Well maybe we're saying the same things, but not using the same definitions.

Long Term tax in the US on Cap Gain is currently 20% of the gain.

Short Term taxes are charged at the same rate as your usual income tax. So, if you are paying at the rate of 30% on your income, then that's what you'll pay on short term transactions (less than 12 months holding).

Now, LIFO is Last In, First Out. That means the last time you purchased shares, it's those shares that will be the ones you first sell. Unless you are only buying once a year, then these have a very high probablity of being Short Term Gains and therefore taxed at a rate nearly 50% higher than Long Term Gains.

FIFO is First In, First Out. This means if you started an AIM account in 1998 with 1000 shares, any sales you've had since then would be taken against that initial purchase. Subsequent purchases would be stacked up behind that first block and not sold until the initial block has been exhausted. Then it would be the next oldest shares in inventory, etc. Therefore, you would be usually selling inventory that's at least 12 months old except in unusual periods like 2000 - 2001. During such times it is possible to exhaust all older shares and then be working on only the newer stuff purchased.

Hope this helps,
Tom