Hi all quick question. In 2009 when the market was at its low I invested $10,000 in a series of mutual funds. As the stock market grew my account quickly gained value to $14,000. Last summer I decided it was time to pull some of the gain, so I took out $5,000 which still left $9,000 in the account. On my 1099 from schwab it shows a total gross proceeds of 5,005.87.

My instincts tell me since my initial investment was $10,000 of which I only pulled $5,000 so shouldn't owe any capital since I didn't exceed my cost basis.

If anyone could shed any light on this it would be appreciated.

Thanks,
Matt

Calculating and adjusting cost basis accurately is a daunting task, but there is an amazing online tool which will automatically calculate and adjust your cost basis in seconds. It is used by brokerage firms and Fortune 500 companies and is now available to the public. All you need are the purchase and sale dates and shares of the stock or mutual fund and the system has the rest of the information, such as corporate actions (splits, spin-offs, etc), pricing, and dividends and it also will apply the appropriate IRS rules for inherited and gifted shares. The regulation also gives investors the option to choose calculation methods. Not only does NetBasis automatically calculate the method you choose, it will also give the results for all options and allow you to choose the best result. As an added sense of security, NetBasis also provides you with detailed supporting documentation which shows all of the calculations and the adjustments in chronological order. NetBasis also has data going back as far as 1925, so it will accurately calculate cost basis for your old American Telegraph and Telephone shares in seconds. NetBasis also handles complex investment scenarios such as wash sales, short sales, return of capital, etc. NetBasis takes the difficulty out calculating cost basis and gives you peace of mind when reporting your capital gains.

Not sure if this means my cost basis figure is wrong? Seems like I am just being offered a product to buy. Not sure what to think.

“My instincts tell me since my initial investment was $10,000 of which I only pulled $5,000 so shouldn't owe any capital since I didn't exceed my cost basis.”---->I guess you need to contact your agent of Schwab; basically, there are several different methods of computing your gain or loss for partial mutual fund sales.For example, the IRS permits taxpayers to choose among four alternative basis determination methods in computing the gain or loss on disposition. When a partial disposition occurs, like your case, the method selected can affect the gain or loss recognized. While the total net gain or loss remains the same, the nature and character may differ, depending on the tax method used.