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Identified Shares

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Identified shares
Stock or mutual fund whose purchase date and price may be identified for capital gains and tax purposes when shares sold.

Identify Shares
To match shares sold with those bought. An investor may buy shares in a stock slowly over a number of years at many different prices. When he/she sells some of those shares, he/she identifies which shares he/she intends to sell. This is done to minimize his/her capital gains tax liability. For example, suppose an investor buys 5,000 shares at $10 per share and 5,000 shares at $20. If this investor later decides to sell 3,000 of her 10,000 shares at $25, she will likely identify the shares as the ones bought at $20. This means that her profit is only $5 per share instead of $15. That means her capital gains taxes will be less than it otherwise would have been.


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