Permalink Submitted by Alan - IRA critic on Thu, 2015-08-13 22:12
There is no difference if the entire holding is sold. However, based on the timing of the investment gains or losses and a partial sale date, there would be a difference in the gain or loss reported on the partial sales. For example, if the investment had consistent gains, average cost would produce a higher basis (lower gains) on partial sales. If the investment has consistent losses, average cost would produce a lower cost basis (higher losses) on partial sales. Therefore several different results are possible on partial sales. But by the time the investment position has been totally sold, the total gain or loss would be the same.
Permalink Submitted by Alan - IRA critic on Thu, 2015-08-13 22:12
There is no difference if the entire holding is sold. However, based on the timing of the investment gains or losses and a partial sale date, there would be a difference in the gain or loss reported on the partial sales. For example, if the investment had consistent gains, average cost would produce a higher basis (lower gains) on partial sales. If the investment has consistent losses, average cost would produce a lower cost basis (higher losses) on partial sales. Therefore several different results are possible on partial sales. But by the time the investment position has been totally sold, the total gain or loss would be the same.