Sale of stocks & mutual funds

Key points

Stock sales cannot use average cost to calculate the cost basis.

Mutual funds can use average cost if the shares were held at the agent or the custodian.


How do I figure the cost basis when the stocks I'm selling were purchased at various times and at different prices?

If you can identify which shares of stock you sold, your basis is what you paid for the shares sold (plus sales commissions).

If you sell a block of the same kind of stock, you can report all the shares sold at the same time as one sale, writing VARIOUS in the "date acquired" column of Form 1040, Schedule D (PDF).

However, what you enter into the "cost or other basis" column is the total of all the acquisition costs of the shares sold.

If you cannot adequately identify the shares you sold and you bought the shares at various times for different prices, the basis of the stock sold is the basis of the shares you acquired first (first-in first-out).

Except for certain mutual fund shares, you cannot use the average price per share to figure gain or loss on the sale of stock.