Let's say I bought 1 share in a Vanguard mutual fund each year for 10 years. Its price started at $1 and went up by exactly $1 each year, so the price of the latest share bought is $10.
The average cost basis for one share is then $5.5.
If I ask Vanguard to sell 5 of them at average cost basis, does it calculate the cost basis of shares sold at $5.5, the average cost of ALL shares? Or is the average cost basis based on the shares actually sold?
e.g. if it decides to sell lots 1-5, then the average cost basis of just those 5 shares is $3.
What is the cost basis of shares sold in that case -- $3 or $5.5?