[[I'm afraid that this is mistaken. There are four methods for accounting for mutual fund withdrawals: FIFO, single-category average cost, double-category average cost, and specific identification. Even if you're cleaning out the fund, you should still calculate gains under both FIFO and single-category average cost, because the second method can (albeit rarely) convert some short-term gains to long-term gains.]]Correct...and you can learn more about the details of these methods in IRS Publications 550 and 564 at the IRS web site. In addition, I believe that I have some additional information on these issues in the Taxes FAQ area. I KNOW that we cover these issues, with examples, in the TMF Investment Tax Guide.TMF TaxesRoyWant to learn more about taxes and investing? Then we have a deal for you!! The Motley Fool Investment Tax Guide is now available through Fool Mart. Don't be the LAST one on your block to own this masterpiece, since it's sellin' fast. Remember: It's never to early to start planning for your 1999 taxes. So just click on this link (http://www.foolmart.com/market/product.asp?pfid=MF+013+I) to read more about this amazing collection of tax information. (Apologies for the shameless plug…but it is a pretty good book…if I do say so myself). In addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions) area, click on http://www.fool.com/school/taxes/taxes.htm and you'll be right at the home page. Check it out. Finally, if you need to get to the IRS web site, click on http://www.irs.ustreas.gov to go directly there.
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