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Old 02-22-2008, 06:45 PM
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Question Mutual fund sale avoid double tax?

I sold 350 shares of my mutual fund for $ 8239..Of the $8239, $2019 dollars were from cap gains and dividends.How do i determine my gain or loss?Do i subtract the 2019 from my proceeds since i already paid tax on these shares?How do i caculate my gain or loss on this sale?Is my basis only from shares i purchased directly?Thanks iam confused.



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Old 02-23-2008, 11:02 AM
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How does one determine the gain or loss on Mutual Fund sales?

The IRS Tax Code does not double tax you on the sale of mutual funds!

First question I have for you is this, did you re-invest the proceeds, ie were the capital gains and dividends declared reinvested into the mutual funds? If they were, the amount paid to you should be added to the original cost basis, thus reducing the total gains on the sale of the mutual funds.

Now, they the funds declared these dividends and capital gains and you opted to be receive these payments, then they do not get added to the basis in the calculation of the capital gains and losses. These are really earning generated from the mutual funds and therefore are includable in income on Schedule B usually, the year they are paid to you. The Sale of the Mutual Funds are a separate transaction resulting in a gain or loss and are reported on Schedule D.

The mutual funds will typically send you a year end report that actually shows your basis of the mutual funds that are sold. You should also refer to their 1099-Report, as this report is sent to the IRS as well. Your cost basis should match the number reported on the 1099 Report sent by the mutual funds.

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Old 02-24-2008, 10:12 AM
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Mutual fund sale

This not an ira account.I did reinvest all cap gains and dividends and paid tax on these every year. I record all transactions in quicken which gave me a cost per share.Is this all i need to do as far as figuring an accurate cost basis?My mutual fund statement only showed the # of shares sold and the proceeds of the sale.I did not get any cost per share information.Thanks for your help.


Last edited by gerryt : 02-24-2008 at 10:16 AM. Reason: added one comment


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Old 02-24-2008, 03:06 PM
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Cost basis of Mutual Funds sold where dividends and capital gains are reinvested!

Since you "did reinvest all cap gains and dividend" as you mention, then your basis is the aggregate of Capital Gains and Dividends received over the years plus the original purchase price!

Hence, your gain or loss would be calculated as follows:
Sale Price - Cost Basis = Gain or Loss

Cost Basis is calculated as follows:
Cost Basis = {Original Cost Purchase +(Sum of all Cap Gains + Dividends)}

Effectively, the reinvestment of dividends and capital gains have increased your cost basis, and thus reduced your potential profit by $2,019, the amount of cpaital gains and dividends that were reinvested. The Tax Code require you to increase your cost basis by that amount!

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