benchmark Posted November 27, 2015 Share Posted November 27, 2015 I had this debate with my friend. Let's say that you bought 200 share of AIG at $50 1 year ago, and then bough another 200 at $60 3 weeks ago. Then to maximize your return, you sold 2 Nov 27 $63 calls. Now you share will be called away. Do you do FIFO which implies that you'll pay longer gain tax, or do you do LIFO which you'll pay short term gain. I argued for LIFO, because you end up paying less tax in dollar amount; He said FIFO is better because you pay less tax in terms of percentage. I argued that unless one is to keep the $60 buy for another year, one should do LIFO. FIFO: (63-50) * 200 = $2600 gain at 30%, which is $780 tax bill LIFO: (63-60) * 200 = $600 gain at 50%, which is $300 tax bill. WDYT? Link to comment Share on other sites More sharing options...
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