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"I sold some mutual fund shares (actually I converted them into another fund within the same brokerage) and now I have a 1099-B with the gross proceeds listed. "

OK, for the purposes of taxation, you sold shares of one mutual fund and used the money to buy shares of a different one. If the buy and sell was within the same fund family, you wouldn't get charged a second load. That doesn't affect the tax status.

"Do I owe capital gains taxes on the sale/conversion of these shares?"


" If so, how do I figure my cost basis since I have had this fund since 1993 and reinvested all dividends and capital gains?"

You add up all the dividends, capital gains, any additional investments you may have made, That grand total is your cost basis. Is some of the dividends and capital gains were on shares held less than one year, you may have some short term capital gains or losses. These go on a separate line of Schedule D from your long term gains/losses.

"Besides, I thought I had already paid taxes each year on the dividends and gains, so do I get taxed again?"

Not really. Figure that the gains and dividends were reported each year. Now they are added to your basis. That's why it is important to add these gains and dividends from past years to your original cost--so you don't get taxed on them a second time.
After you add in all those past dividends, it is possible that you will have a loss on the fund, or at least no further gains. If that's the case, you won't have additional tax to pay. If you now have a loss, you can write off up to $3000 of it against your regular income.

The taxation of mutual funds is complicated, but not impossibly so. Your old tax returns where you paid tax on the dividends may be a source of where you can look to figure how much gains you have already paid tax on. The mutual fund company also may be helpful, or your broker may be. I keep a loose leaf notebook with accounting paper in it for this sort of information. Invaluable when it comes to reporting on an investment held for several years!
Best wishes, Chris
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