Like many people, I have the periodic dividends and interest payments from my taxable accounts going into a money market fund rather than to purchase additional shares of the fund. This makes it easy at the end of the year to use these funds (for rebalancing, or spending) without needing to sell shares of the fund (and generate a possible cap gain to be taxed).
It occurs to me that this is no longer necessary or desirable. With the new basis reporting rules and the very easy tracking of "lots" on Vanguard's site (probably the same at other companies), I have gone from using "average cost" basis to using "specific shares" basis. While it used to be expensive for me to sell shares recently purchased with dividends (because I used "average basis", which was fairly low), I can now sell these appreciated shares relatively cheaply if they haven't gone up much in price. And, if prices have dropped, these newly purchased shares might offer a handy opportunity to harvest some losses for tax purposes, if a person is paying taxes on ca gains.
All this is probably fairly obvious, but changing the handling of my periodic dividend and interest payments in light of the new basis reporting rules wasn't something that had occurred to me before.
It occurs to me that this is no longer necessary or desirable. With the new basis reporting rules and the very easy tracking of "lots" on Vanguard's site (probably the same at other companies), I have gone from using "average cost" basis to using "specific shares" basis. While it used to be expensive for me to sell shares recently purchased with dividends (because I used "average basis", which was fairly low), I can now sell these appreciated shares relatively cheaply if they haven't gone up much in price. And, if prices have dropped, these newly purchased shares might offer a handy opportunity to harvest some losses for tax purposes, if a person is paying taxes on ca gains.
All this is probably fairly obvious, but changing the handling of my periodic dividend and interest payments in light of the new basis reporting rules wasn't something that had occurred to me before.