“The overall objective of the proposed tax reform is to shift toward a less complex tax system,” says Joe Breslin, a planner with Armstrong Dixon in Baltimore. “But the change will likely result in a tax increase on long-term investors who want to carefully select which shares to sell.”
While mutual funds themselves were originally included in the FIFO provision—which would have taken away fund managers’ ability to be strategic when selling stock—intense lobbying by the fund industry and the Investment Company Institute influenced lawmakers to carve out an exemption for fund managers late last week.