Mutual Fund Shares and Capital Gains

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  • #14200
    DABU1989
    Participant

    Dear All,

    We have invested in couple of mutual funds, would like to redeem shares (sell all shares in one transaction), and close the account in 2021. All capital gains are “long-term.” The mutual fund company is using average cost basis for both covered and non-covered shares. Our tax filing status: married filing jointly and our capital gains rate is 15%. I am also planning to sell worthless securities which could result in a capital loss of $3K to offset capital gains.

    My question is, do I need to ask the mutual fund company to compute cost basis based on FIFO (First-In-First-Out) to compare it with average cost basis for covered shares? Does it make a difference in our case since we are selling all the shares and capital gains are long-term? The mutual fund company has indicated to me that for “non-covered”, they only use “average” cost basis. Please provide your suggestions and comments. Thanks for your help. Regards, Dabu.

    #14203
    Kaye Thomas
    Moderator

    The method used won’t make a difference in your tax liability when selling all the shares at one time.

    #14243
    DABU1989
    Participant

    Thank you Sir for the clarification. Regards, Dabu.

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