Selling specific shares on Merrill Edge can be a crucial strategy for managing your investment portfolio, especially when you want to optimize your tax situation. Unlike simply selling a quantity of shares, "specific identification" allows you to choose exactly which "tax lots" (groups of shares bought at a specific price and date) you want to sell. This can be immensely helpful for minimizing capital gains taxes or maximizing capital losses.
So, are you ready to take more control over your investment sales and potentially save on your taxes? Let's dive in!
Understanding the "Why": Why Sell Specific Shares?
Before we get into the "how," it's important to understand why you might want to sell specific shares. Merrill Edge, by default, often uses the First-In, First-Out (FIFO) method. This means that when you sell shares, the system assumes you are selling the shares you acquired first. While simple, FIFO might not always be the most tax-efficient method.
This is where specific identification comes in. By choosing specific shares (or tax lots), you can:
Minimize Capital Gains: If you have shares purchased at different prices, you can choose to sell the shares with the highest cost basis. This results in a smaller capital gain, and thus, less tax owed.
Maximize Capital Losses: Conversely, if you want to realize a loss for tax purposes (e.g., for tax-loss harvesting), you can choose to sell shares with the lowest cost basis (meaning they've dropped significantly in value). This allows you to claim a larger capital loss, which can offset capital gains and even a limited amount of ordinary income.
Control Long-Term vs. Short-Term Gains: You can strategically sell shares held for over a year (long-term capital gains, typically taxed at a lower rate) versus shares held for less than a year (short-term capital gains, taxed at your ordinary income rate).
Now, let's get to the step-by-step guide!
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| How To Sell Specific Shares On Merrill Edge |
Step 1: Log In to Your Merrill Edge Account (And Get Familiar!)
First things first, let's get you logged in! Open your web browser and navigate to the Merrill Edge website (merrilledge.com). You'll need your User ID and password. If you have trouble logging in, make sure you're using the correct credentials or utilize the "Forgot User ID" or "Forgot Password" links.
Once you're in, take a moment to familiarize yourself with the interface. Look for sections like "My Accounts," "Portfolio," or "Trade." This is where you'll initiate your sale.
Sub-heading: Important Pre-Trade Checks
Before you even think about selling, there are a few important things to consider:
Know Your Holdings: Understand which specific shares you own, when you bought them, and at what price. This information is crucial for specific identification. Merrill Edge usually provides this data in your "Holdings" or "Portfolio Details" section, often organized by "tax lot."
Tax Implications: While this guide helps with the process, it's highly recommended to consult a tax advisor before making significant sales to fully understand the tax implications of specific identification for your individual situation.
Market Conditions: Consider the current market conditions. Is it the right time to sell? Are there any significant news events impacting the stock?
Step 2: Navigate to the Trading Platform
Once logged in, you'll need to find the trading section.
Look for a prominent button or link that says "Trade" or "Place Order." This is usually found in the main navigation menu or directly on your portfolio overview.
Clicking this will take you to the order entry screen, where you can specify the details of your trade.
Step 3: Select the Stock You Wish to Sell
Tip: Look out for transitions like ‘however’ or ‘but’.
On the trading screen, you'll typically see an option to select the security you want to trade.
Enter the Symbol: Type in the ticker symbol of the stock you intend to sell (e.g., AAPL for Apple, MSFT for Microsoft).
Select from Holdings: Alternatively, Merrill Edge often allows you to select the stock directly from your portfolio holdings, which can be convenient as it pre-fills some information.
Sub-heading: Choosing the "Sell" Action
After selecting the stock, you'll need to indicate that you want to sell it.
Look for a dropdown menu or radio buttons that offer "Buy," "Sell," "Buy to Cover," or "Sell Short." Select "Sell."
Step 4: Specify "Sell Specific Shares" or "Select Tax Lots"
This is the most critical step for specific identification.
After choosing "Sell," you'll usually see an option related to how you want to handle the shares. This might be labeled as "Cost Basis Method," "Tax Lots," "Sell Specific Shares," or something similar.
By default, it might be set to "FIFO" (First-In, First-Out). You need to change this setting to allow for specific identification.
Look for a selection that allows you to "Select Tax Lots" or "Specific Identification." Click on this option.
Sub-heading: Understanding Tax Lots
When you select "Specific Identification," Merrill Edge will typically display a list of all your individual "tax lots" for that particular stock. Each tax lot will show:
Acquisition Date: When you bought those specific shares.
Quantity: How many shares are in that particular lot.
Unit Cost (or Cost Basis per Share): The price you paid per share for that specific lot.
Total Cost Basis: The total amount you paid for that lot.
Unrealized Gain/Loss: The current profit or loss for that specific lot based on the current market price.
Carefully review this information. This is where you'll make your strategic decisions about which shares to sell to achieve your desired tax outcome.
Step 5: Choose Which Tax Lots to Sell and the Quantity
Now, it's time to act on your strategy.
Next to each tax lot, you should see a field where you can enter the quantity of shares you wish to sell from that specific lot.
You can select shares from multiple tax lots to reach your desired total selling quantity.
For example, if you want to sell 100 shares, you might select 50 shares from a lot with a high cost basis (to minimize gain) and 50 shares from a lot with a low cost basis (if you want to realize a gain).
Step 6: Select Your Order Type
Tip: Read the whole thing before forming an opinion.
After specifying the shares, you'll need to choose the order type. This determines how your trade is executed in the market.
Market Order: This is the simplest but carries the most risk. A market order instructs Merrill Edge to sell your shares immediately at the best available price. While it ensures quick execution, the final price might fluctuate, especially in volatile markets. Use with caution for large orders or illiquid stocks.
Limit Order: Highly recommended for more control. A limit order allows you to specify the minimum price at which you are willing to sell your shares. Your order will only be executed if the market price reaches or exceeds your specified limit price. If the price isn't met, your order won't execute. This gives you price protection.
Sub-heading: Order Duration
For Limit orders, you'll usually have options for how long the order remains active:
Day: The order is active only for the current trading day. If it doesn't execute by market close, it's canceled.
Good 'Til Canceled (GTC): The order remains active for a longer period (often up to 60 days, but check Merrill Edge's specific policy) until it's executed or you manually cancel it.
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Step 7: Choose Your Distribution Method
After your trade executes, you'll receive the proceeds. You'll need to tell Merrill Edge how you want these funds handled.
Proceeds to Remain in Brokerage Account: This is the most common option if you plan to reinvest the funds or keep them accessible within your Merrill Edge account.
Check: You can request a physical check to be mailed to you.
Wire Transfer: For faster access to funds, you can request a wire transfer to a linked bank account (fees may apply).
Deposit into LIIA (Limited Individual Investor Account): If you received the shares through an equity award plan, this might be an option.
Step 8: Review Your Order Carefully
This is a crucial step! Before you hit "Submit," Merrill Edge will provide a comprehensive summary of your order.
Double-check everything:
Stock Symbol: Is it the correct company?
Action: Is it "Sell"?
Quantity: Is the total quantity correct?
Tax Lots Selected: Have you accurately chosen the specific tax lots you intended to sell? This is where the specific identification truly matters.
Order Type: Is it a Market or Limit order? If Limit, is the price correct?
Distribution Method: Is this where you want the money to go?
Estimated Proceeds: Get an idea of the money you'll receive.
If anything looks incorrect, go back and make adjustments. It's much easier to correct it now than after the trade has been submitted.
Step 9: Submit Your Order
Once you've thoroughly reviewed and confirmed all the details, click the "Place Order" or "Submit Order" button.
Sub-heading: Confirmation and Tracking
After submission, you'll receive an order confirmation number. Keep this handy for your records.
You can typically track the status of your order in the "Orders" or "Activity" section of your Merrill Edge account. It will show whether the order is "Pending," "Partially Executed," "Executed," or "Canceled."
Step 10: Confirm the Sale and Update Records
Tip: Pause, then continue with fresh focus.
Once your order is fully executed, you'll receive a trade confirmation document, usually electronically. This document will show the exact price at which your shares were sold and all associated fees.
Verify that the specific tax lots you intended to sell were indeed recorded as such. This is vital for your tax records.
Update your personal investment records to reflect the sale. Keeping meticulous records of your cost basis and sales is essential for accurate tax reporting.
By following these steps, you can confidently sell specific shares on Merrill Edge, leveraging the power of specific identification to manage your portfolio more effectively and potentially optimize your tax outcomes.
10 Related FAQ Questions: How to Sell Specific Shares on Merrill Edge
Here are 10 frequently asked questions, starting with "How to," related to selling specific shares on Merrill Edge, along with quick answers:
How to check my tax lots on Merrill Edge before selling?
You can typically view your tax lots by navigating to your "Holdings" or "Portfolio Details" section and clicking on the specific stock. Merrill Edge usually displays the acquisition date, quantity, and cost basis for each lot.
How to change the default cost basis method from FIFO to specific identification on Merrill Edge?
When placing a sell order, look for an option like "Cost Basis Method" or "Tax Lots" and select "Specific Identification" or "Select Tax Lots" instead of the default FIFO.
How to choose which shares to sell for tax-loss harvesting on Merrill Edge?
For tax-loss harvesting, you'd typically select the tax lots with the highest unrealized losses (meaning the shares you bought at a higher price than the current market price) when using specific identification.
How to ensure I'm selling long-term capital gain shares specifically on Merrill Edge?
When selecting tax lots, identify those with an "acquisition date" that is more than one year prior to the current date. Choose these specific lots to realize long-term capital gains.
QuickTip: Focus more on the ‘how’ than the ‘what’.
How to sell specific shares that were received as a gift or inheritance on Merrill Edge?
Shares received as a gift or inheritance have specific cost basis rules. You'll need to determine their adjusted cost basis (often the donor's basis for gifts, or market value at the time of death for inheritances). When selling, you can still use specific identification if these are held in distinct tax lots. Consult a tax advisor for details.
How to find my cost basis for specific shares on Merrill Edge?
Merrill Edge automatically tracks the cost basis for "covered securities" (generally those acquired after 2011). This information is usually available in your "Holdings," "Portfolio Details," or when you initiate a sell order and choose to view tax lots.
How to cancel a specific share sell order on Merrill Edge?
If your order hasn't been executed, you can usually cancel it by going to the "Orders" or "Order Status" section of your Merrill Edge account and selecting the option to cancel the pending order.
How to understand the difference between a market order and a limit order when selling specific shares?
A market order sells your chosen specific shares immediately at the best available price, while a limit order allows you to set a minimum price at which your specific shares will be sold, providing more price control but no guarantee of execution.
How to get the proceeds from selling specific shares deposited directly into my bank account from Merrill Edge?
When completing your sell order, select "Wire Transfer" or a similar option for distribution. You'll need to have your bank account linked to your Merrill Edge account beforehand.
How to confirm which specific tax lots were sold after the trade is executed on Merrill Edge?
After the trade is executed, check your "Trade Confirmations" or "Transaction History" documents, which Merrill Edge provides online. These documents will detail which specific tax lots were sold and at what price.
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