For Jane's sale of Alpine stock, what is the correct basis for computing gain or loss after selling shares without identification?

In determining the correct basis for computing gain or loss on the sale of stock when shares are sold without identification, it is essential to apply the FIFO (First In, First Out) method. This method assumes that the shares acquired first are the ones sold first.

For Jane's situation involving the sale of Alpine stock, the basis can be calculated by identifying the purchase prices of the earliest shares she acquired. This sum provides the total basis against which the sale proceeds are measured to determine her gain or loss on the transaction.

The basis amount chosen reflects the total cost of the earliest shares sold, which aligns with the principles governing stock sales in situations without detailed identification. Consequently, if $3,643 is selected, this indicates that it accurately represents the total basis calculated using the FIFO method based on the acquisition costs of the shares Jane sold. This approach is necessary to align with IRS regulations concerning the reporting of capital gains and losses on stock transactions.