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Author: JeanDavid Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 124834  
Subject: Capital Gains: Stocks vs. Mutual Funds Date: 5/2/1997 9:44 AM
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I bought a closed-end mutual fund in about 1967 that
traded as a stock on the NYSE. I re-invested capital gains.
Now capital gains on stocks can be evaluated
FIFO or identified lots method. I took delivery of all the
stock certificates. Sometime in the 1970's or 1980's the
fund changed to an open-end fund for which the average-cost
method is used for computing capital gains.

Last year I sold some of the shares represented by the
certificates by sending them to the fund requesting that
they be sold. Considering them as a stock, I used the
FIFO method of computing capital gains. Since that time, I
have sold all the shares I bought as stock in closed-end
mutual fund. I hope this was legal. Does the IRS consider
those shares as stock (since I bought and sold them that
way), or a mutual fund, since that is what the new
corporation is?

I now have only the shares represented by
the reinvested dividends and capital gains. When I sell
these, I assume I will use the average cost method to
compute the capital gains. I guess I compute the average
cost by dividing the number of shares I have by the cost
basis as given by, e.g., Quicken, since I have a record
of all my transactions in there. Right?
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