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<< I do have a muni tax free mutual that I sold off completely this year, that needs your assistance please. I rec'd a 1099b that gives gross proceeds and # of shares.I also rec'd an income not reported to IRS for tax free dividend on this same mutual. Now I am confused. If it is tax free, why am I reporting the gross proceeds to incur capital gains???. >>

You're confusing the investment with the interest income from the investment, and you're not the first to do so. The interest paid to the fund and passed on to you is exempt. Any capital gain on your investment is not. You report the sale on Schedule D. >>

<< One more question please. If you exchange a mutual for another, is the sold mutual treated as a gain or loss? >>

It depends on whether or not you made money. Proceeds (net of commissions) minus basis (cost plus commissions on the buy) equals gain or loss.

Phil Marti
Tax Preparer
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