Yes. The specific identification method allows you to use the cost basis of the shares you sell to figure your gain or loss. FIFO, or first-in, first-out, is the default method for figuring basis if you do not instruct your broker or agent to use the specific identification method. You can override FIFO at any time buy giving directions to your broker; get a written confirmation that you are using the specific identification method.
The tax on the investment income in excess of $1,700 (may change after 2007) of a child under age 18, based on the parents’ marginal tax rate and computed on Form 8615.