Page 1 of 1

Capital Gains Question

Posted: Thu Aug 23, 2018 10:29 am
by RealPerson
I have a specific lingering question on long term capital gains. My non-retirement brokerage account in quite old and before understanding investing better I used to sell mutual fund shares without indicating specific shares. I think this is dollar cost averaging. The IRS does not allow a change in cost calculation method in an account once you use DCA. I have been looking for ways to change the cost calculation method without having to sell all my shares and pay a fortune in LT capital gains. I came up with the following strategy, but I am wondering if anyone here knows whether this is kosher or not.

I want to take a number of more recently purchased shares, i.e. specific lots with a specific cost and transfer them to a newly established non-retirement investment account in my wife's name. We have separate accounts, so she is not an owner of my investment account. After that is complete, she would have these shares in a brand new account. We could then sell specific lots without having to worry about DCA, thereby being able to choose our capital gains for a particular sale. Voila problem solved. Vanguard told me they can easily do this. My wife and I both have existing individual Vanguard accounts. As far as I can tell this should work. But is this a legally acceptable strategy? I would love to hear if anyone has ever done this or knows whether my thinking is correct or not. Thanks!