When I sell only a portion of my shares of a stock, which shares actually get sold

Question

1. Two years ago, I bought 100 shares of XYZ.

2. Yesterday, I bought another 100 shares of XYZ.

3. Today, I sold 100 shares of XYZ.

4. Which 100 shares did I actually sell? If it were the 100 shares from 2 years ago, then that contributes to my long term capital gains tax. If it were the 100 shares from yesterday, then that contributes to my short term capital gains tax.

Answer 1

At the time of the sale, you can designate what shares you want sold. The IRS requires that your broker verifies that those specific shares were sold. The IRS calls this "specific share identification." Without that confirmation, the IRS will default to FIFO (First In, First Out).