For our existing clients with brokerage accounts, Valley National has elected to report cost basis to you and the IRS using the “tax lot optimized” method on covered securities. In the future, this election could save you thousands of dollars of income taxes on capital gains
Choosing a cost basis method– When you sell part of your holdings in a security that you’ve acquired at different times and prices, brokerage firms use a default cost basis method to determine which shares to sell.
If another cost basis method is more appropriate for your tax situation, you can switch methods.
If you want to change the cost basis method for a specific trade, you must do so before it settles.
An investor would change the cost basis method, in almost all cases, so as to create a short term loss or a long term loss. It is cumbersome to have to change the method each and every time such a situation is available to the investor; so, Valley National has elected, for brokerage accounts carried at Valley National, to use the default cost basis method known as “Tax Lot Optimizer” to determine which shares to sell . This method can be changed in the rare event that the investor does not benefit by using Tax Lot Optimizer method.
If your investment account is NOT carried by Valley National, and you would like to make sure your tax lot accounting will be optimized, please contact me for further instructions