Be choosy when liquidating only a portion of a stock or mutual fund position accumulated over time. If you’re selling less than your entire position in an investment, it’s generally best to sell the shares in which you have the highest basis (assuming they’ve been held more than 12 months). This decreases your gain or increases the loss on the sale. If the shares with the highest basis aren’t the first ones you acquired, it’s important to indicate to the broker or transfer agent the specific shares to be sold by reference to the date of purchase and cost. To complete your tax records, the broker or transfer agent also needs to send you a written confirmation of these instructions within a reasonable time after the sale.
