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Old 11-14-2013, 06:25 PM
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I hold shares of the same mutual fund at two separate brokerage houses. When I sell a fund from one brokerage, can i use their cost basis?

I hold shares of the same mutual fund at two separate brokerage houses. Therefore, I have an Average cost basis from each of the two brokerages. If I sell from Brokerage A, can I use my average cost basis from Brokerage A as is, or do I need to figure my overall average basis from the 2 brokerage firms?



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Old 11-15-2013, 02:05 PM
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Originally Posted by tgenoyer View Post
I hold shares of the same mutual fund at two separate brokerage houses. Therefore, I have an Average cost basis from each of the two brokerages. If I sell from Brokerage A, can I use my average cost basis from Brokerage A as is, or do I need to figure my overall average basis from the 2 brokerage firms?
The two accounts will be independent. As you sell shares of a mutual fund, you are required to declare the gain or loss on your income tax return. First, you must know your basis, or cost, of the mutual fund shares that have been sold. I guess when you sell from Brokerage A, you can use my average cost basis from Brokerage A, NOT composite overall avg cost basis. When shares of a fund are sold, you have a few different options as to which cost basis to use to calculate the capital gain or loss on the sale. The first in, first out method simply states that the first shares purchased are also the ones to be sold first. Subsequently, each investment in the fund has its own cost basis. The average cost single category method calculates the cost basis by taking the total investments made, including dividends and capital gains, and dividing the total by the number of shares held. This single cost basis then is used whenever shares are sold. The average cost double category basis requires the separation of the total pool of investments into two classifications: short term and long term. The average cost is then calculated for each specific time grouping. When the shares are sold, you can decide which category to use. Each method will generate different capital gains values used to calculate the tax liability. Subsequently, you should choose the method that provides you with the best tax benefit.



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