When you sell, you should be able to select the shares that you sell. If you sell the shares bought for $40, you can show a loss for tax purposes, while the shares you bought for $20 remain as an unrealized capital gain.

You have to choose the shares to sell carefully. If you don't specifically select them, your broker may use an alternate method to determine your basis.

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"100% of the people who confuse correlation and causation end up dying."

Ok, I am fairly new to this, I haven't sold anything for a loss yet.

Not bragging... I started last March when everything was shit and everything has only gone up since then.

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How does Danny Hart sit down with balls that big?

You can typically go back and attempt to correct the basis with your broker if you mess up, but it is a pain. Most UIs will ask you if you want to do FIFO, LIFO, or specific lots.

Better question: why aren't you selling the higher basis shares for a loss? If you have other recognized CG that would offset some.


Also worth mentioning: If you sell for a loss and then buy back some or all of those shares (or other substantially similar security) within 30 days of the sale, they would assume the cost basis of the purchase price plus the loss per share from the sale, and the loss would be disallowed. That is called a wash sale.* Would also apply if you bought the other 100 shares at $20 within the last 30 days.** Not an issue here since you aren't accelerating the loss. But when the IRS has a rule set up to prevent people from gaming the system and you are doing the opposite, it should always give you pause. ;) It is nice to have a perfect winning record, but I will take a reduced tax bill over that any day of the week.

* ex) you bought 100 shares at $40, sold at $27, and immediately bought in again at $28. The loss would be disallowed, and your cost basis would be $41 ($28 basis + $13 disallowed loss).

** ex) you bought 100 shares at $20 two weeks ago, and sell your $40 lot today at $27. The loss would be disallowed, and your basis in the remaining $20 lot would be increased to $33 ($20 basis + $13 disallowed loss).

NOTE - it has been a long week, and I am tired, so forgive me if some of this math is incorrect.

My position pays a portion of my salary as company stock. I'm taxed for the purchase price, even though I never see that money

As the above have said you have to understand when it was bought and what you paid for it, as well as the short term and long term gains taxes.

There are times intentionally taking a loss on a sale makes sense from a tax perspective, but you have to understand what you are doing. It isn't simple math and most people that do that use an accountant.

The last time I sold stock it was to pay for my daughter's wedding. I told the accountant how much I needed and he sold what some at loss and some at profit so my total tax burden was almost a wash - I did pay some tax.

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"...the street finds its own uses for things"