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Say I have an account with the following buying history:

Date Symbol Price Quantity
01/01/2023 AAPL $300 3 shares
01/01/2022 AAPL $100 1 shares
01/01/2021 AAPL $100 1 shares
  1. If I were trying to sell some shares on 01/01/2024, am I able to sell all of these shares (5 shares) and qualify the returns all as long-term gains?
  2. If I were trying to sell some shares on 01/01/2023, am I restricted to only selling 2 shares (the shares purchased on and before 01/01/2022, i.e. the shares held for at least a year) if I want them to qualify as long-term gains?

TLDR: I'm trying to sell stock in a brokerage account and want the returns to qualify as long-term gains. Do I need to be specific in ensuring I'm only selling shares that were purchased at least a year ago and nothing more? How is holding time calculated within a brokerage account where things are always being bought?

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    For US if you sell after exactly one year it's short-term; you must hold for a year and a day to get long-term rates. If you change your example to 01/02/2024 it works -- except you couldn't have made those purchases because New Year's Day (01/01) is always a market holiday, plus 01/01/2022 and 2023 were weekends. Commented Mar 15 at 2:20
  • @dave_thompson_085 Great addendum. This was meant to also be part of my question, but I forgot to ask it. Thanks for catching that.
    – jed
    Commented Mar 15 at 15:22

2 Answers 2

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The holding time is calculated for each lot separately and you do need to specify which lot you're selling. Most brokers allow defaulting to FIFO or LIFO (i.e.: by default you'll be selling the oldest/newest lot), but you should also be able to explicitly select the lots from which you want to sell the shares.

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    IRS specifically says that if you don't instruct the broker, it defaults to FIFO. However, I suppose some brokers may allow you to pre-specify a default method so you don't have to restate it on every sale transaction.
    – Barmar
    Commented Mar 14 at 14:54
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    I think I remember ETrade having that option
    – littleadv
    Commented Mar 14 at 15:56
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If I were trying to sell some shares on 01/01/2024, am I able to sell all of these shares and qualify the returns all as long-term gains?

Yes.

If I were trying to sell some shares on 01/01/2023, am I restricted to only selling 2 shares (i.e. the shares purchased on and before 01/01/2022).

No. You can sell whatever you want whenever you want. The only difference: If you sell shares you've held for less than a year, any gains are short term capital gains. The specific scenario is a bit odd. If you buy 3 shares and 1/1/23 and sell them again on 1/1/23 there will be almost no gain or less (just fees).

I'm trying to sell stock in a brokerage account and want the returns to qualify as long-term gains. Do I need to be specific or thorough in ensuring I'm only selling shares that were purchased at least a year ago and nothing more?

Yes.

How is holding time calculated within a brokerage account where things are always being bought?

Holding time is calculated for each lot individually. A new lot is created each time you buy shares. When you sell you specify how much to sell from each lot. It's your responsibility to make sure you only sell from lots that a older than one year.

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  • "When you sell you specify how much to sell from each lot" You don't have to. If you don't, it generally defaults to FIFO.
    – Barmar
    Commented Mar 14 at 14:55
  • Right in general, but not for exactly one year (and not for 01/01 specifically); see my comment on Q Commented Mar 15 at 2:21

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