Cost basis methods determine which tax lots (shares purchased at the same price on the same day) are sold first. Direct shareholders of PIMCO funds should choose a cost basis accounting method allowed under the Internal Revenue Code.
The following cost basis methods are available:
Average Cost (ACST) – A method for valuing the cost of covered shares in an account by averaging the effect of all covered transactions in the account. The gain/loss is calculated by taking the cumulative dollar cost of the covered shares owned and dividing it by the number of covered shares in the account. Non-covered securities are calculated separately from covered securities and are not reported to the Internal Revenue Service.
First In, First Out (FIFO) – Depletes shares beginning with the earliest acquisition date
Last In, First Out (LIFO) – Depletes shares beginning with the latest acquisition date.
High Cost, First Out (HIFO) – Depletes shares beginning with shares purchased at the highest cost.
Low Cost, First Out (LOFO) – Depletes shares beginning with shares purchased at the lowest cost.
Loss/Gain Utilization (LGUT) – A method that evaluates losses and gains and then strategically selects lots based on that gain/loss in conjunction with a holding period.
Specific Lot Identification (SLID) – The shareholder needs to designate which specific shares to redeem at the time they place a redemption request. A secondary accounting method must be selected and will only be activated if the lots chosen are no longer available. Please note that average cost cannot be used as a secondary accounting method.