When you seek to minimize capital gains and thus taxes when you sell stock, you select to sell the shares that have the highest purchase price (i.e. the highest cost basis). This article presents what I learned so that Robinhood stock traders understand how they can potentially reduce their taxes. Example: You own 3,000 shares of XYZ company purchased more than one year ago (all would generate long-term capital gains). On its website, under Cost Basis, Robinhood states: “Robinhood uses the ‘First In, First Out’ method.

Source: Forbes September 03, 2020 14:48 UTC