Tax question on investments

[Qacer]

I figured I'd save some cash by doing taxes myself. I was hoping to get some questions regarding 1099-B answered.

I sold all my shares for a company stock in 2007. When I bought the shares, I first purchased some of it in Spring 2006. During the beginning of 2007, I purchased some additional shares. When summer came, I decided to sell it all.

How do I handle this on my tax forms?

I'm using Turbo Tax to help me out with some tax filing, and it's telling me that I need to split one sale into two in order to take into account my long-term and short-term loses and gains. I'm not quite sure how to do this.

Any tips?

[Kojak]

You need to go by first in first out. So the shares that you bought first will be long term capital gains. You will need to get your confirmation or statment to show what you paid and what you sold for. The remaining shares will be short term.

Example: (assumptions)

Buy 50 shares Spring 06 for $100 per share for a total of $5000.

Then in the Summer of 07 you bought another 50 shares for $80 per share or $4000.

Later that Summer you sell all 100 shares at $110 per share.

So, the first 50 shares would be sold for (50x$110) $5500. $5500 minus the purchase price of $5000 would give you a LONG TERM cap gain of $500.

The second 50 shares would be (50x 110) or $5500. You paid $4000 for these. So your SHORT TERM cap gain would be $1500.

Remember to subtract for your transaction fees.

[Elohim]

Remember to subtract for your transaction fees.

That can be hard to do. I know I regularly put a order in and have 10 different buyers so it looks like I made 10 different trades on my taxes but I was only charged commission for one so be careful you don't deduct too much for commission.

[Qacer]

Thanks! That makes sense now. For my transaction fee, I decided to add the broker commission multiplied by the percentage of long-term or short-term shares. So for my cost basis, I have:

cost basis = # of long or short -term shares * sale price per share + transaction fee * % of long-term or short-term shares

Is this acceptable?