When selling shares, how is profit calculated? From average buy price?

[Jansen]

Let's say I bought share A 3 times, each time buying 10 shares. If I were to sell just 2 shares, could I sell just the ones where the difference between the buy and sell price is the smallest, thus triggering a lower profit/capital gains?

I've looked on SBI and Nomura and don't see any mention of it. They all list just a singular figure for the difference.

[goodandbadjapan]

I had a similar issue when making a partial surrender of one of those off-shore funds. It was made up of units bought at varying prices over multiple years and so when I was making a partial surrender I needed to know which units were being sold (or the original prices anyway) so that I could calculate the gain. Nowhere could I find an answer. My 'financial advisor' at the time didn't know and the provider of the vehicle (one of the big off-shore providers) didn't even seem to understand the question. In the end I calculated how much I had paid for the units in total, what my current gain for those stocks was, and apportioned it according to how many units I was selling, hoping that would suffice. It seems to have been okay (or at least I have paid my tax bill for this year and nobody asked any questions). But it was incredibly frustrating trying to find anybody at all who could give me an answer.

[jcc]

Pretty sure that what the brokers use for tax purposes is calculated exactly as goodandbadjapan said.

They just sum up the total cost you've payed so far and divide it by the share count to figure the per-share cost

[captainspoke]

In my case, for US-based shares and ETFs, I specify the number of shares and purchase dates (with f/x), along with the shares sold (and the f/x for that).

The variations are endless. A person could buy 100 shares of something on ten different dates, and sell all at once or in 100-share lots. Or they could buy 1000 shares of something on the same date, and sell in 100-share lots. It's a bit of excel work, but you simply list the purchase and sale prices for various lots of the same company or ETF instead of listing it as a single purchase/sale. I'm able to specify which lot(s) to sell when I place a sell order--not just last in first out--and can choose a lot or lots with a higher or lower basis, depending on what I want to do.

OTOH, if you've chosen to reinvest dividends, this could be a headache. You might be "purchasing" small numbers of shares (even fractional) on a quarterly or annual basis. For the tax office, each of those reinvestment events (share purchases) would need to be accounted for. Personally, I don't want to deal with that, and this is one reason I don't tick the box to reinvest dividends--it keeps things 'cleaner' for tax prep purposes.

[captainspoke]

Let's say I bought share A 3 times, each time buying 10 shares. If I were to sell just 2 shares, could I sell just the ones where the difference between the buy and sell price is the smallest, thus triggering a lower profit/capital gains?

I've looked on SBI and Nomura and don't see any mention of it. They all list just a singular figure for the difference.

To (try to) be more direct, no, it is not from the average buy price. On the sheet you'd be submitting to the tax people, you'd need to list the specific purchase details of the shares that you were selling. (Purchase price in original currency, the conversion of that to ¥ on the date purchased (using the TTM rate), and then the same details for the sale.)

"If I were to sell just 2 shares..." You can do this, but you will have to match those two shares with a purchase date, so that capital gain/loss could be calculated--in yen. (Changes in f/x rates can turn a sale into an excessive gain/loss when you've converted the transactions into yen.)

As for this, "...could I sell just the ones where the difference between the buy and sell price is the smallest..." you need to ask your broker if you can specify exactly which shares you want to sell. Mine allows me to do this, I don't know if j-brokers allow this. Also, what you can do regarding this with stocks or ETFs (possible?) will probably differ for mutual funds (not possible?). This last part is a guess/speculation, so you'll just have to check with your broker.