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Use the Specify Sale Method screen to allocate the sold quantity of the asset using IRS approved methods. Notice the top portion of this screen indicates the trade date, security symbol and security description. The lower portion of this screen indicates the quantity sold and lists a table showing all current holdings of the asset. The quantity sold can be applied using one of several methods:
- Minimum Gain: use this choice to have Portfolio Manager automatically sort holdings and allocate the sold quantity to result in the minimum dollar gain realized. Security lots are sorted highest unit cost to lowest unit cost and reduced in this order until all quantity sold has been applied.
- Maximum Gain: use this choice to have Portfolio Manager automatically sort holdings and allocate the sold quantity to result in the maximum dollar gain realized. Security lots are sorted lowest unit cost to highest unit cost and reduced in this order until all quantity sold has been applied.
- First-In First-Out: when you choose to apply a sale transaction using the first-in first-out method, security lots are automatically sorted and reduced by holding period, starting with the oldest lot held, then the next oldest, and so on, until the sale is totally applied. The IRS assumes the first-in, first-out method was used unless the investor specifically identifies which lots were used (the specific identification method).
- Specific Identification: when you choose to apply a sale transaction using the specific identification method, you have the flexibility of applying the sale to specific asset lots held in order to maximize or minimize any associated gains or losses for tax purposes. To help manage your taxable gains, use the Sort By options to organize security lots by holding period and unit cost.
- Average Cost: in the sale application of mutual funds, Portfolio Manager enables you to choose between the unit cost paid, or the average cost paid, to determine the capital gain or loss realized. Please check with your tax advisor, or IRS publication IRS Publication 564: Mutual Fund Distributions, for further reference. Portfolio Manager defaults with the unit cost basis paid for all security lots. Average cost methods include both single-category average basis, or double-category average basis.
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