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Author: moneyforgolf One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121461  
Subject: cost basis mutual fund Date: 4/7/1998 1:51 PM
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HI......
I have 2 mutual funds which Istarted to fund in 1987 ..I haven't bought any more shares in the fund for the last two years....when I sell it, will the company figure my cost basis or do I have to go through every statement and figure it out? It would be a lot of work since I invested almost monthly for years...the funds are American century Ultra and Growth.....thanks, debbie
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Author: vargaj Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3312 of 121461
Subject: Re: cost basis mutual fund Date: 4/7/1998 4:55 PM
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Some funds calculate what is called the average cost basis for you. If they provide this figure then you can use it if and only if you sell all of your shares at once. If they don't provide it, or if you sell each fund piecemeal, then you need to figure the cost basis yourself. You actually have some choices, you can figure the average cost basis (total shares divided by total cost), or when you sell you can specify which shares to sell (by quantity and purchase date) and figure the cost basis of the shares you sold, or you can use the FIFO method which means you sell the first shares you bought first and so on. Don't forget that you may also have bought shares when the fund declared dividends and you reinvested those dividends. It can be tediuos to do all this and if you sell all at once its a whole lot easier, because then all you need to do is add up all you paid with cash + reinvested dividends and that's your basis. But one more thing: You'll need to seperate your shares between short (less than a year old), intermediates(between 1yr and 18 months) and long (over 18 months.). Hope this helps


Joe Varga

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Author: moneyforgolf One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3316 of 121461
Subject: Re: cost basis mutual fund Date: 4/7/1998 8:56 PM
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Thanks Joe...Your info was helpful....I was aware of most of what you said since I have spent all my free time reading tax info like a mental patient! but I am learning alot! I think I'll call the fund and ask if they will let me know the average cost basis...I do plan on selling them all at once anyway........thanks for you time....Debbie

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3334 of 121461
Subject: Re: cost basis mutual fund Date: 4/8/1998 10:12 AM
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[[I have 2 mutual funds which Istarted to fund in 1987 ..I haven't bought any more shares in the fund
for the last two years....when I sell it, will the company figure my cost basis or do I have to go
through every statement and figure it out? It would be a lot of work since I invested almost monthly
for years...the funds are American century Ultra and Growth.....thanks, debbie]]

While many funds DO provide you with a "cost basis" report when part (or all) of the fund is liquidated, some still do not. You'll have to call the fund and find out if they do or do not.

If they do not, the computation of the basis will be your responsibility. Difficult or not.

For additional information on the taxation of mutual funds, see IRS Publication 564.

TMF Taxes
Roy

SPECIAL NOTE: I try to answer as many questions as I can each week, and I generally select those that have not been asked before. If you don't get a detailed answer to your question, it is probably because my time is so limited during tax season, or because it has already been asked and answered in this folder in the past, or because it has been discussed in the Taxes Frequently Asked Questions area. In order to visit the Taxes FAQ area, go to the Fool's School area (http://www.fool.com/school.htm) and check out "Other Features" in the list box, OR you can jump directly to the Taxes FAQ area (http://www.fool.com/school/taxes/taxes.htm). Additionally, if any references were made to the IRS Web Site, you can get there by pointing your web browser to (http://www.irs.ustreas.gov)


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