Changing Cost Basis Methods

Your choice to use the separate lot method or the average basis method for mutual fund shares in one year doesn’t necessarily lock you into using that method for all future years. Generally you can change from the separate lot method to the average basis method any time you want. For covered shares (generally shares … Continue reading “Changing Cost Basis Methods”

Electing a Cost Basis Method

Your mutual fund shares are divided into two categories. Covered shares — generally any shares purchased after 2011 — are covered by rules requiring brokers and mutual fund companies to report cost basis and holding period in addition to sales proceeds when you make a sale or exchange. Investments acquired earlier are noncovered shares. The average basis … Continue reading “Electing a Cost Basis Method”

Isolating IRA Basis

If your traditional IRA holds both pre-tax and after-tax money, you have to treat any distribution from that account, including a conversion, as coming from both categories proportionately. If you have more than one traditional IRA, we use the overall total of pre-tax and after-tax dollars, not the figures from any one IRA, to calculate the … Continue reading “Isolating IRA Basis”

Selling Mutual Fund Shares

Each purchase of stock in a company, and each purchase of mutual fund shares, creates a distinct lot. For stock in a company you generally have to track the cost basis of each separate lot. For mutual fund shares (and stocks held in a dividend reinvestment plan, or DRIP) you have a choice between using this separate … Continue reading “Selling Mutual Fund Shares”

Guide to Capital Gains and Losses

Capital gain basics Capital Gains and Losses 101 Capital Gain FAQs Capital Gain and Loss Categories Purchase and Sale Step by Step Capital Losses Capital Losses Loss Limitation and Carryover Capital Loss with Little or No Income Capital Loss Whipsaw Claiming a Loss from Worthless Securities Acquiring stock Basis of Stock You Purchase Acquiring Stock … Continue reading “Guide to Capital Gains and Losses”

Mutual Funds 101

Mutual funds offer a way to have your money managed as part of a large pool of money contributed by many investors. You gain two big advantages: Diversification. It’s important to have your money divided among many different investments. As a mutual fund investor you share in the performance of all the investments made by … Continue reading “Mutual Funds 101”