Cost Basis Calculator (FIFO/LIFO)

When you sell a stock, your taxable gain or loss is the difference between the sale price and your cost basis, which makes pinning down that basis one of the most consequential numbers on your return. It can move your tax bill meaningfully: gains on shares held more than a year are taxed at 0%, 15% or 20% depending on taxable income, while shorter-term gains are taxed as ordinary income. Get the basis right and you avoid handing the IRS more than you owe.

Four methods are available here, and each one points at a different set of purchase lots. FIFO (First-In, First-Out) treats your oldest shares as the first sold; LIFO (Last-In, First-Out) does the opposite and sells the newest first; Specific Identification lets you name the exact shares going out the door (the calculator models it by selling the highest-cost lots first, the choice with the smallest gain); and Average Cost blends every lot into a single weighted figure, a method the IRS allows only for mutual fund shares and shares held in a dividend reinvestment plan. Whichever you pick decides which purchase prices attach to the sale, and therefore the size of your reported gain or loss.

If you never track basis yourself, your broker typically defaults to FIFO, which is not always the most tax-efficient choice. With a position that has appreciated sharply, Specific Identification lets you unload your highest-cost shares first and hold your gain down. One more rule to respect: wash sale provisions can disallow a loss if you buy back a substantially identical security within 30 days before or after the sale that produced it.