Can Average Cost Method be Used?

[Yardley CPA]

Client purchased T Rowe Price Mid Cap Growth Fund through Ameritrade.  400 shares during 2014 @ $61/share.  $24,400

Client purchased T Rowe Price Mid Cap Growth Fund Through Ameritrade.  34 Shares during 2015 @ $72/share.  $2,448.

2015 1099-B shows sales as follows:

Report on Form 8949, Part II with Box E Checked - Basis is Not Provided Long Term     69 Shares

Report on Form 8949 Part 1with Box B Checked or Part II with Box E Checked - Basis is not Provided    360 Shares

 

Under this scenario, can sales price be calculated using the Average Cost Method?  Since the 69 shares sold are being reported as Long Term, I would think I would need to use the FIFO method, no?

 

 

 

 

[Yardley CPA]

My question is more theory based.  I recognize the difference between the FIFO and ACM will not be significantly different. 

[Don in Upstate NY]

Several problems ...

Client must have had RPMGX in his portfolio before the 2014 purchases.  And it was these older shares that were sold.  Any shares bought in 2014 or 2015 would be covered, and reported as A or D.

I've never seen a 1099-B that gave you a choice between short or long term (B or E)

RPMGX never traded at 61 during 2014.  Its low that year was 71.76 according to Google Finance.

On your basic question, FIFO and Average Cost are not mutually exclusive.  Assuming that a mix of shares were involved, the shares actually traded are first identified by applying FIFO, and then costed by using the average cost of the shares in each of the four categories - short and long term, covered and non-covered. A single sale can give rise to four entries on a 8949.