What FIFO Is, and Why Congress Just Killed It
Tax reform efforts have been fast and furious in recent months, and with both the House of Representatives and the Senate having gone through their own processes to come up with proposals, key differences emerged. Yet not all of those differences really made sense. One issue that emerged as highly controversial and potentially destructive to individual investors was the Senate's FIFO provision. Getting its name from the abbreviation of the tax reporting method that it sought to make mandatory, FIFO would have had a huge impact on longtime investors, creating a large effective tax increase.
To their credit, lawmakers have reportedly moved swiftly to eliminate the FIFO requirement from the unified tax reform proposal. Yet the fact that the measure got as far as it did is a testament to the dangers of working so quickly to try to find even minimal revenue-raising measures to offset tax cuts. Let's look in more detail at what FIFO is and why it just got the ax.
Image source: Getty Images.
Source: Fool.com
