Specific Identification
Choose which shares you sell, and how that changes your gain.
With specific identification, you choose exactly which lot (or lots) you are selling. You might pick high-cost shares to realize a smaller gain or a loss, or pick long-term lots to get long-term treatment.
The key rule: identify by settlement
For shares held by a broker, you must tell the broker which shares to sell no later than the settlement date of the sale, and for covered securities the broker's confirmation or account statement documents it (Treas. Reg. § 1.1012-1(c)). Many brokers let you choose a lot at trade time or set a standing order such as "highest cost first." If you don't make an adequate identification, FIFO applies.
Example: same shares as the FIFO page, different result
Lots: 100 @ $20 (Mar 2022), 100 @ $30 (Jun 2023), 100 @ $40 (Feb 2025). You sell 150 shares at $45 in October 2025 ($6,750) and identify all of Lot 3 and 50 shares of Lot 2.
| Shares sold | Proceeds | Basis | Gain | Term |
|---|---|---|---|---|
| 100 from Lot 3 | $4,500 | $4,000 | $500 | Short-term (held under a year) |
| 50 from Lot 2 | $2,250 | $1,500 | $750 | Long-term |
| Total | $6,750 | $5,500 | $1,250 |
FIFO produced a $3,250 gain; specific identification produced $1,250. The tradeoff: $500 of it is short-term, and the low-cost Lot 1 is still waiting for a future sale.
Example: harvesting a loss
You own 100 shares bought at $60 and 100 bought at $25. The stock is now $40. Selling the 100 shares bought at $60 realizes a $2,000 loss ($4,000 − $6,000). FIFO might have chosen the $25 lot and realized a $1,500 gain instead. If you buy the stock back within 30 days, see wash sales.
Frequently asked questions
Can I change my mind after the trade settles?
No. The identification has to be made by the settlement date. After that, the broker reports the lots it actually used.
Can I use specific ID for mutual funds?
Yes. Specific identification is available for mutual fund shares too, as an alternative to average cost.
Sources
- Treas. Reg. § 1.1012-1: Basis of property (FIFO default, adequate identification, average basis)
- IRS Publication 550: Investment Income and Expenses (basis of investment property, wash sales, nondividend distributions)
- IRS: Instructions for Form 1099-B (covered securities, boxes 1e, 1g, 5 and 12)
- IRS: Instructions for Form 8949 (reporting sales, basis adjustments and codes)
Last reviewed: November 2026