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How do I figure out my Capital Gains for a fund? I bought $4000 in 1997 and it was a load fund so after the fee I had $3810.23 actually invested. I cashed out this year completely and received $4968.75. What I'm trying to figure out is whether my initial “investment” is $4000 or the actual amount after fees. And, are those load fees deductible? Thanks.
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Here is how I do it.
On Schedule B.
Name of mutual Fund
date
Cost: Your cost is $4000.
Amount received. 4968.75
Capital gain is 968.75 and it is all long term.
But You can up your cost or reduce you received if you payed mutual fund generated capital gains or dividend.
If you reinvest Capital gains or dividends. The tax you payed on them reduces you gain.
And if you did have capital gains and dividends reinvested those shares purchased might be short term capital gains. But if you only got 986.75 and were reinvesting dividends and capital gains you were smart to cash out.
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<< How do I figure out my Capital Gains for a fund? I bought $4000 in 1997 and it was a load fund so after the fee I had $3810.23 actually invested. I cashed out this year completely and received $4968.75. What I'm trying to figure out is whether my initial “investment” is $4000 or the actual amount after fees. And, are those load fees deductible? >>

Short answer: Capital gain/loss equals amount received minus basis.

Long answer: For your original investment, your basis is $4,000. Load fees, just like brokerage fees, are part of your basis.

Not covered in your question is distributions while you owned the fund. Usually mutual funds distribute earnings at least annually. If you reinvested earnings rather than getting a check, those amounts add to your basis. (If your fund didn't distribute any earnings while you owned it or you took yours in cash, ignore this part.)

Example: In 1997, the fund distributed $100 in earnings (in the form of additional shares). In 1998, the fund distributed $500 in earnings. Your basis is now $4,600.

Phil Marti
Tax Preparer
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