Selling stocks; but bought at different times, what price do I use for selling?

I purchased "Company A" at 3 different times for 3 different prices.
I now want to sell some of that stock, I would know the selling price, but how do I determine what I bought that stock for? They were purchased from 1994 - 1998.

The rule for reporting capital gains is first in, first out, or specific identification. If you are selling all the stocks at the same time, simply use their average cost. But if you are selling only part, you must assume that you first sold the shares you bought earliest. However, you are permitted to use specific identification. This enables you to control the amount of gain or loss you have to report. For example if you bought shares for $10, $20, and $30, and are now selling stock at $25, you can report a loss by selling the $30 stock, or a small gain by selling the $20 stock, although you first bought the stock at $10. When placing your stock with a broker who is holding your shares, your order should say, "sell X shares bought on [date]." That qualifies the sale as specifically identified.

For figuring a capital gain or loss, I think you need to do it first in/first out. Say you bought 200 shares at $10, 200 at $15 and 200 at $20. If you sell 300 shares, then the purchase price would be $10 for 200 shares and $15 for 100 shares -- I think.

The general rule that is followed is first in first out

You can go to Yahoo finance or MSN and take a look at the chart which will give you the open, hi, Lo, close for particular days.
If your not sure, of the exact day, you could estimate the time frame.

If and when you determine a price on particular days you can enter your sell order with a memo field that states "vs purchase 01/01/94 (using the dates you select). This is acceptable to the IRS and it will assign the profit to the particular purchase.

You really SHOULD NOT average them out, averaging is used primarily for mutual funds especially where there was a PIP in effect or where dividends/gains were paid monthly.

Good luck, if you have capital gains, and declare such you wont be hasseled as to the exact cost but at least be prepared to demonstrate that you tried.

I have never seen anything from the IRS or any tax professional that has said you can average out purchase prices for stock. I have seen it stated in multiple places that you may not average out purchase prices for stock. One such place is

http://www.fairmark.com/capgain/ident.htm

which says

"Q: Can't I just use the average basis of the stock I bought, treating all shares as having a basis of $50?

A: No. There are basis averaging rules for shares of mutual funds but not for regular stocks."

The author of this article, Kaye Thomas, is a tax lawyer.

So, if you bought at three different times you need to use three different lines on Schedule D, one for each purchase. If you sold all the shares in one transaction, you divide the total amount received between the three lines according to the number of shares. For example, if your purchases were for 200 shares, 100 shares, and 250 shares, and you sold all 550 shares for $110,000 you would calculate the amount received per share are $110,000 / 550 = $200 so you would report you sold
the 200 share lot for $200 x 200 = $40,000
the 100 share lot for $200 x 100 = $20,000
the 250 share lot for $200 x 250 = $50,000.

The purchase price for each of the lots is something that you should have maintained in your records. If you did not, and if you have not switched brokers, it is quite likely your brokerage has kept track of that information for you.

If neither you nor your brokerage has a record of what you paid for the stock, you need to estimate the amount based on the time you purchased it. To get historical stock prices you can use a service such as the Yahoo quotes An example, for General Electric, is at

http://finance.yahoo.com/q?d=t&s=GE

To get to your company type the stock ticker symbol in the box left of the "get quotes" button then click on the button. Once you have the correct company, click on "Historical Prices" in the left column of the screen.

If you have other questions about capital gains or losses you may find the guide at

http://www.fairmark.com/capgain/index.htm

very useful.

The average price that you paid It's now your cost of the stock. It's called, Dollar Cost Averaging.

Just divide total amount paid by total amount of shares

Take the total value of all your shares divided by your shares.

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