If I have a mutual fund that I have invested $55K in, and had$45K of
capital gains reinvested (years ago) for a total basis of $100K. If
the account value is now $85K and I sell $10K off, is that $10K taxable?
wrote:
> If I have a mutual fund that I have invested $55K in, and had$45K of
> capital gains reinvested (years ago) for a total basis of $100K. If
> the account value is now $85K and I sell $10K off, is that $10K taxable?
What's the cost basis of that 10K?
One sells shares. "Which" shares are sold is a matter of
import. Tax law permits a few ways of designating which
shares you're selling. But there are some nuances, so you'll
have to do a little more googling/asking around. Or consult
your tax accountant guy.
Hopefully you kept careful records of all purchases and
reinvestments of shares.
<> wrote
> If I have a mutual fund that I have invested $55K in, and
had$45K of
> capital gains reinvested (years ago) for a total basis of
$100K. If
> the account value is now $85K and I sell $10K off, is that
$10K taxable?
>
Tess Millay wrote:
> One sells shares. "Which" shares are sold is a matter of
> import. Tax law permits a few ways of designating which
> shares you're selling. But there are some nuances, so you'll
> have to do a little more googling/asking around. Or consult
> your tax accountant guy.
>
> Hopefully you kept careful records of all purchases and
> reinvestments of shares.
>
On the other hand with mutual funds one can use an average basis. It
does not appear that the OP has a gain. He can use the lose to off set
other gains and income.
> <> wrote
> > If I have a mutual fund that I have invested $55K in, and
> had$45K of
> > capital gains reinvested (years ago) for a total basis of
> $100K. If
> > the account value is now $85K and I sell $10K off, is that
> $10K taxable?
> >
So...simply put, in this example, i could sell all shares without a
taxable gain because the value of the account was less than the basis?
"PeterL" <> wrote
> Tess Millay wrote:
> > One sells shares. "Which" shares are sold is a matter of
> > import. Tax law permits a few ways of designating which
> > shares you're selling. But there are some nuances, so
you'll
> > have to do a little more googling/asking around. Or
consult
> > your tax accountant guy.
> >
> > Hopefully you kept careful records of all purchases and
> > reinvestments of shares.
> >
>
> On the other hand with mutual funds one can use an average
basis. It
> does not appear that the OP has a gain. He can use the
lose to off set
> other gains and income.
With a few assumptions, I would wholeheartedly agree. But I
hesitate without having a bit more information from the OP.
The basics of this and other approaches the OP should
consider is outlined at many sites. See for example
utualFunds.html
Some of the alternative approaches may allow the OP to
increase the apparent capital loss further. But then the
records have to be well-kept yada.
<> wrote in message
news:
> So...simply put, in this example, i could sell all shares without a
> taxable gain because the value of the account was less than the basis?
Yes. Verily, given the facts you presented (if complete), you would be able
to declare a $15K long term capital loss:
>> If I have a mutual fund that I have invested $55K in, and had
>> $45K of capital gains reinvested (years ago) for a total basis
>> of $100K. If the account value is now $85K and I sell $10K
>> off, is that $10K taxable?
The loss is completely long term because you have stated that the
reinvestment was years ago (hence more than a year ago) - that means that
the original investment was also more than a year ago.
If all shares were held long term, and you are selling all shares, then
there are no nuances in computing gain - simply how much did you pay
(total), how much did you get when you sold (total) - the difference is the
gain or loss.
If you are not selling all shares, or some of the shares were purchased
within the last 365 days (including reinvestments), then the particular
accounting method (specific shares, average cost, etc.) can make a
difference in how much loss you declare and/or what percentage of the loss
is short term vs. long term.
Note that the TurboTax page that another response cited is wrong in this
regard; it says that if you are selling all shares, the accounting method
used doesn't matter. It does matter if you have a mix of short term and
long term shares.
--
Mark Freeland
"PeterL" <> wrote in message
news:
> On the other hand with mutual funds one can use an average basis.
Maybe. Almost certainly for the OP. But if you hold shares in certificate
form, then you cannot use average cost basis.
(Little known triva, but important for long term investors like me who
actually have a fund certificate.)
--
Mark Freeland