Simpler? This Senate Move Would Make Selling Stocks More Taxing
Congress is hard at work trying to take various provisions from the House tax reform package and the Senate's follow-up proposed legislation to produce an agreeable bill that both can support. Yet there are still major differences between the two proposals. One in particular has drawn fire from investors because of the way it would limit their ability to make a crucial choice when they sell stocks and other investments. Losing that freedom would impose a huge cost for ordinary investors.
This controversial provision is known as first in, first out, or FIFO for short. Under the Senate proposal, taxpayers would be required to use this method for determining cost basis, with huge implications for the amount of capital gains tax they have to pay when they sell stocks and other investments. The law is especially important because of the way that most investors accumulate shares of their favored investments over time, but even though the amount of money at stake appears to be minimal, it hasn't been easy for lawmakers simply to agree to take it out of the final tax reform package.
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Source: Fool.com
