Clarification on short term vs long term capital gains

[Joe T.]

This may be a simple question for most of you, but for some reason I can’t seem to find the answer on google.

Suppose, I invest $1000 a year into a fund, say, VOO. I’ve invested 10 years so far and put in the $1000 for this year just last week.

Now if I need to sell $500, how will that be taxed? Is it long term capital gains since I’ve been investing awhile, or short term gains since I just recently put in $1000?

What about if I need to see $5000, how will the tax for that calculated?

Thanks in advance for all the answers!

[Brian Schmelzlen]

Hi Joe,

Technically, it depends on what shares were sold.  My understanding is that it is generally FIFO (first in, first out), so it would be long-term capital gains (the shares purchased 10 years ago would be sold first).  To be 100% confident though, I would ask your financial advisor how it will be reported on your 1099-B.