If you own a taxable mutual fund, or one investment with several lots - the tax "reform" will stick
it to you. Again.
Usually, when you sell shares of an investment with many purchasing dates and prices - as with reinvesting dividends - you can specify which lot to sell as to minimize taxable gain.
But the Republicans would like to squeeze you, so you will have to follow the "first in first out" meaning that, in most cases, the first in are the cheaper ones and your taxable income will be higher.
From today's WSJ:
Selling those shares usually brings a higher tax bill if the stock’s price has been rising. Some small investors are fuming that the new rule would cause them to pay much more in taxes.
Troy Jenkins, a 39-year-old engineer in Auburn, Pa., expects to sell his remaining stocks before the end of the year because of the tax proposal.
“It doesn’t have the interest of all Americans in it,” he said.
The impact could be even greater for his 93-year-old grandmother who has been living off income from her AT&T stock that her late husband accumulated when he worked for its Western Electric unit. Mr. Jenkins said the proposal would force his grandmother to sell twice the amount of stock she normally would have just to maintain her income.
After the money-management industry argued that the change would make markets less efficient, the Senate said the provision wouldn’t apply to the firms that manage mutual funds and exchange-traded funds—only to their individual clients.
The House’s tax proposal doesn’t include the first-in, first-out provision, and some lawmakers are trying to kill it. In a letter to Senate leaders on Thursday, 41 House Republicans urged their colleagues to drop the provision, saying it would amount to “massive, fundamental change that inhibits investor autonomy.”
https://www.wsj.com/articles/small-investors-face-steeper-tax-bill-under-senate-proposal-1512988201
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