specific shares method


An accounting strategy that enables an investor to reduce taxes on capital gains. For example, suppose an investor purchased 100 shares in company XYZ at $60 per share. A year later the investor purchased 100 more shares at $80 per share. The stock then went up to $90 per share. If the investor wanted to sell 100 shares of this stick, he or she could instruct a broker to sell the shares purchased at $80, thus reducing the capital gains for tax purposes.
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specific performance specification