Tax Law (Questions About Taxes)/mutual fund cost

Advertisement


Question
Hi,I need your help!
How does the dividend and capital gain (taxes on which had been paid) of a mutual fund affect the cost basis?
For example, I had accumulated 100 shares of a mutual fund (dividend and capital gain reinvested) over 3 years and sold 50 shares. The mutual fund company sent me a cost basis (average cost) of $500. The dividend and capital gain of the 100 shares over the 3 years are $100 which I have paid taxes on my tax return. Is the cost basis equal to $500+$100/2= $550?

Best regards!

David

Answer
you dont say what you paid for the 100 shares "accumulated"

but yes, the purchase price plus dividends reivnested is your new total basis.  call the brokerage fund and ask for an analysis/calculation of their determination.

i agree that if you paid 1000 for all 100 shares, the basis would be 1000 plus 100 divided by 2

but i am guessing you missed something.  the likelihood that fidelity (or vanguard or trowe, etc) is wrong is pretty slim!  

Tax Law (Questions About Taxes)

All Answers


Answers by Expert:


Ask Experts

Volunteer


MEdusa

Expertise

Tax and general business including hospitality related (hotel mgmt degree and experience in industry prior to obtaining ms tax and cpa).

Experience

19 years cpa. ms tax. NOTE: My discussions are only a general information and do not constitute tax advise without entering into a specific agreement and executing an engagement letter; This free chat is nothing more than general information and should not be construed as tax advice nor does my response or replies imply an agreement to provide client specific advice or other guidance for purposes of avoiding IRS tax or penalties and should not be relied upon without your own validation and confirmation of the how the discussion may fit your facts... Not having all the facts and/or not having a direct client relationship prevents me from providing the most accurate replies as possible and I highly suggest using a local CPA to provide you with written advice and guidance. Taking matters into your own hands is much akin to trying to land an airplane without a license. It is easy to FLY a plane, but LANDING is when critical experience is key. In short, caveat emptor; do your homework and don't just rely on free chat board advice anywhere, anytime.

Organizations
AICPA, CSCPA (Ct society), National Tax,

Publications
a bunch.

Education/Credentials
MS tax and other post graduate coursework

Awards and Honors
variety including Summa Cum Laude

Past/Present Clients
I don't disclose or kiss and tell

©2016 About.com. All rights reserved.