What are the four methods allowed by the IRS to calculate average cost?
The four methods that can be used to calculate cost basis and resulting gains and losses are: Single-category average cost divides the total purchase cost of all shares held at the time of redemption by the number of shares in your account. DWS uses this methodology when providing average cost information. Double-category average cost separates all shares in the account at the time of redemption into two categories: short-term (shares held one year or less) and long-term (shares held longer than one year). Average cost is determined for each category by dividing the total cost basis of a categoryÕs shares by the number of shares in the category. Specific identification allows you to identify specific shares when you make a redemption. To use this method, you need to obtain written confirmation from your mutual fund or other financial services provider of the shares you specified to be sold. FIFO (first in, first out) determines a capital gain or loss based on the sequence in which shar
