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Author: tc001 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121144  
Subject: Re: Tax Consequences of Selling off Mutual Funds Date: 4/20/1998 7:50 PM
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<<I am trying to figure out how to estimate how much taxable income will be added when shares of a mutual fund are sold off completely.

1. Compute the different 'price appreciation' figures on 'share lots' (assuming multiple purchases at
different times, all now being sold off at one time)
-or- the single 'price appreciation' figure (if only one purchase of shares was made) (i.e., 'current
NAV' -minus- 'purchase price');

2. Multiply each of those figures by the matching 'number of shares' (for each purchase); and

3. Subtract each matching 'cost basis' figure.

If I'm correct, the 'sum of the remainders' of each computation (for each 'share lot') will then equal
that of the 'taxable income' liability of the sale.>>

Well, sort of. Your steps (1) and (3) are confused. Simply find the selling price minus cost basis, then multiply by number of shares.

To correct your formula, substitute the words "cost basis" for "purchase price" in step (1) and then eliminate step (3). Cost basis is the purchase price, along with any sales commissions (loads) and fees.
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