Stock-sale planning
FIFO vs. Specific Identification When Selling Company Stock
Learn how tax-lot selection, FIFO, specific identification, basis, holding period, and AMT basis can change the tax result of a company-stock sale.
Direct answer
Selling the same number of shares at the same market price can create different gains depending on the tax lot. IRS guidance permits the basis of specifically identified shares when identification requirements are met. If shares cannot be adequately identified, FIFO may apply. The best lot is not always simply the highest basis because holding period, AMT basis, state sourcing, and concentration goals can point in different directions.
The decisions to put on one timeline
Reconstruct each lot
List acquisition date, quantity, regular basis, AMT basis when relevant, holding period, award source, and state history.
Define the objective
Clarify whether the priority is cash, lower current gain, long-term treatment, AMT-credit use, diversification, or a charitable transfer.
Confirm broker mechanics
Check whether specific-lot instructions are supported and retain timely written confirmation of the shares identified.
Reconcile settlement records
After the sale, compare confirmations and Form 1099-B with the intended lots and tax records.
Highest basis and AMT-aware may not be the same plan
One lot has high regular basis from an RSU settlement. Another has lower regular basis but a much higher AMT basis from an ISO exercise. Selling either may produce different regular gain, AMT adjustment, and potential use of prior-year minimum tax credit.
Illustrative situation. The optimal lot depends on the complete return and non-tax objectives.
What planning examines
Lot-level regular and AMT basis reconstruction
FIFO and specific-identification comparison
Holding-period and state-sourcing review
Broker instruction and documentation checklist
What you receive
The work product should turn tax analysis into specific decisions, dates, and records that can be implemented.
Frequently asked questions
Does my broker automatically choose the best lot?
Not necessarily. A broker default is an administrative method, not a personalized tax recommendation. You must also confirm that the broker supports and records specific identification.
Is highest-basis-first always best?
No. It may reduce current regular gain, but another lot may have a different holding period, AMT basis, state treatment, or strategic purpose.
When must I identify the shares?
Identification and broker-confirmation requirements should be addressed at the time of sale. Changing the intended lot after settlement may not satisfy the applicable rules.
Continue with a related guide
RSU and Stock Cost Basis
Learn why employee-stock basis on Form 1099-B may need adjustment and how to reconcile RSU or option income with W-2, payroll, and broker records.
Read the guideAMT Credit and Form 8801
Understand how prior-year minimum tax credit from an ISO exercise is tracked on Form 8801 and why selling shares does not guarantee an immediate refund.
Read the guideTender Offer Tax Planning
Prepare for a private-company tender offer by reviewing eligible shares, award type, basis, holding period, tax lots, payroll reporting, state sourcing, and cash reserves.
Read the guideNeed a complete tax projection?
Start with a short questionnaire. After reviewing your basic situation and main question, we will determine whether a 15-minute discovery call is the right next step.