A.I.M. Users Bulletin Board

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Well, I tried to clear up my concern over LIFO vs FIFO by taking the three samples in Mr. L's book and figure out how they would stack up with either method. I am afraid it did not help as much as I had hoped.

The Chapter 6 example (the hypothetical 10,8,5,4,5,8) using FIFO ends up showing NO LT holdings at any time in a 10 year cycle and all sales would be ST gains, while LIFO steadily builds up LT shares while all sales are done as ST gains.

The Chapter 7 examples both show roughly the same long term holdings and the FIFO would always yield LT transactions while the LIFO would produce a mixture of ST and LT transactions.

The frequency and size of the transactions are what makes the dramatic difference.

Tom, your observation about passing it along to the kiddies is interesting. I have decided not to pick any approach that relies on the Feds keeping their grubby mitts off of the tax codes! So, to get the most of the long term treatment I can, I think I will have to go with the FIFO treatment.

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