Post-execution re-assignment of tax lots??

[Rich Carreiro]

Sometime pretty recently a "Reassign Lots" option has popped
up in my Fidelity account. When I click on it, I get a page
showing unsettled transactions with this verbiage at the
top:

The Reassign Lots functionality allows you to modify
the lots depleted on individual trades that have
executed but not yet settled. Fidelity generally uses
your account level default disposal method to identify
the lots depleted on closing trades.

**By reassigning lots, you may more carefully manage
the performance and tax implications of your trading
activity.** [my emphasis] Modifications can be made up
to 9:00 PM ET on the trade settlement date.

Click on the Edit Lots link to access a list of
available lots for the selected trade's position.

Each trade can be modified once. Subsequent changes
must be made through a Customer Service Representative
up until 9:00 PM ET on the trade settlement date.


I thought you had to pick at time of sale, not after the
fact, so how is this possible? Or do the specific ID
regulations actually let you choose up to the time you
actually lose possession of the stock -- i.e. settlement
day? Or (and not for the first time!) has a brokerage
botched its interpretation of tax law?

--
Rich Carreiro rlc-...@rlcarr.com

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[Barry Margolin]

In article <87vbtd8...@swing-shift.time-tripper.com>,

Rich Carreiro <rlc-...@rlcarr.com> wrote:

> I thought you had to pick at time of sale, not after the
> fact, so how is this possible? Or do the specific ID
> regulations actually let you choose up to the time you
> actually lose possession of the stock -- i.e. settlement
> day? Or (and not for the first time!) has a brokerage
> botched its interpretation of tax law?

I think they're just interpreting it creatively. If the transaction
hasn't yet settled, they're essentially letting you cancel it and start
over, this time specifying the lots.

--
Barry Margolin
Arlington, MA

[ira smilovitz]

On Sunday, May 11, 2014 1:50:16 PM UTC-4, Barry Margolin wrote:
> In article <87vbtd8...@swing-shift.time-tripper.com>,
>
> Rich Carreiro <rlc-...@rlcarr.com> wrote:
>
>
>
> > I thought you had to pick at time of sale, not after the
>
> > fact, so how is this possible? Or do the specific ID
>
> > regulations actually let you choose up to the time you
>
> > actually lose possession of the stock -- i.e. settlement
>
> > day? Or (and not for the first time!) has a brokerage
>
> > botched its interpretation of tax law?
>
>
>
> I think they're just interpreting it creatively. If the transaction
>
> hasn't yet settled, they're essentially letting you cancel it and start
>
> over, this time specifying the lots.

I don't think it's "creative" at all. If you were executing a trade using shares that you had physical possession of, you would have to deliver the physical shares at the end of the settlement period. You could choose which shares to deliver right up to the point where you made delivery. The broker has to do the same thing. I see no reason why the broker needs a binding designation of shares at the time the order is placed and not simply at some time before he has to deliver them to the buyer.

Ira Smilovitz