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Author: mikraft Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121217  
Subject: Tax Consequences of Selling off Mutual Funds Date: 4/20/1998 1:21 PM
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A question re: selling off MFund holdings . . . (in order to Get Foolish, of course):

I am trying to figure out how to estimate how much taxable income will be added (to other taxable income -- e.g., employment wages, etc.) when shares of a
mutual fund are sold off completely.

I'd like to know whether the following sequence of calculations arrives at the correct figures. (I'm also assuming the only 'tax consideration' is the 'cost
basis' appreciation of shares, since taxes on any 'dividend' income from the funds would have been paid in the year they were distributed -- am I right or wrong there?)

My idea of how to figure out the tax liability is as follows:

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.

So, do I have it right, or where have I goofed?
Thanks, replies appreciated.
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