Probably the simplest is to use the gain amount the mutual
fund family gives you, which is usually the average method.

The first time time you sell some, you have to choose
average or specific shares (e.g. first or last bought), then
stick with it for the life of the fund. "Average" is the
easiest to compute, but not the lowest taxes. Two of my fund
companies now support choosing and gain calculations for
specific shares, but didnt always support such in the past.

Once in while if I'm really bored on a bad weather day I'll
double check one their calculations. However when you have
a dozen funds over several decades making distributions
as frequently as monthly, neither you or the IRS has the
capability to track everything.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Phil Marti" <prm20871[at]verizon.net> wrote:
- quote -

I was wondering if your remarks to your paying clients are
as snide as the above? If so, how do they like them? Do
they find them witty?

--
Slimes-Daily motto:
1) Tax and Spend,
2) Change the Constituion to make it easier to do (1).

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

- quote -

The timing of a distribution could matter if you are selling
at a loss. A reinvested distribution could produce a wash
sale. But it doesn't sound like the OP will have a loss, so
in this case the distribution probably won't matter.

Bob Sandler

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Phil Marti" <prm20871[at]verizon.net> writes:

- quote -

Not quite.

If you sell before a distribution, then to the extent the
distribution consists of ordinary income, you've turned
ordinary income into (usually) long-term capital gain.

For example, let's say you own a share of Fund XYZ at a
basis of $10 and the share is currently worth $20. Assume
that the fund is about to make a $3/sh distribution, of
which $1 is LTCG, $1 is qualified dividends, and $1 is
ordinary dividends. The share will drop to $17 after the
distribution.

If you sell before the distribution, you have a $10
long-term gain.

If you sell after the distribution, you have a $8 ($7 + $1)
long-term gain, $1 of qualified dividends, and $1 of
ordinary dividends.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"levi the flying cat" <elflan[at]yahoo.com> wrote:

- quote -

Selling all shares will make things a little easier. To
calculate the cost basis, you simply add up the total prices
you paid for all the shares you purchased. The only wrinkle
is if you've purchased any shares in the year leading up to
the redemption, you'll need to separate those out because
they're short-term rather than long-term.

If you sell only part of your shares, you have to decide
which shares you're selling and their cost basis. If you
don't specify this to your broker, you're deemed to have
sold the oldest shares. So if you purchased 500 shares on
9/1/2000 and 500 shares on 6/15/2001, and sell 750 shares,
you're assumed to be selling all the 9/1/2000 shares and 250
of the 6/15/2001 shares, unless you tell your broker
otherwise and get a WRITTEN confirmation of this. Once
you've determined which lots you're selling, you compute the
cost basis of each lot by dividing the purchase price of
that lot by the fraction of the lot you're selling; so your
cost basis would be the total price of the 9/1/2000 lot +
half the total price of the 6/15/2001 lot.

Have you been reinvesting distributions back into the fund?
If so, that's generally the most complicated thing, because
each one of those reinvestments is another purchase of
shares. If you sell everything, you just add the
distribution amounts to your cost basis; if not, you'll need
to include these lots when determining which lots you're
selling and their contribution to the cost basis.

I'll bet if you do some googling you can find spreadsheets
that will automate some of these calculations for you.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

levi the flying cat wrote:

- quote -

Hopefuly you either kept up with your cost basis, or your
fund company or brokerage firm keeps track of your cost
basis. Just call and ask. If this is the case, the IRS
allows you to use average cost basis for mutual funds.
Therefore, sell only what you need to sell. Your firm (if
they track it) can supply you with the cost basis for
whatever amount of your fund you sell. Many of them will
actually provide it on your statement at year end. Fairly
simple.

Even if you have to calculate it yourself, you may as well
only sell what you need. It will take you about the same
amount of time to figure the CB most likely.

I hope this helps.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"levi the flying cat" <elflan[at]yahoo.com> wrote:

- quote -

Well, I guess it's easier if you sell everything, since you
would then avoid a little fourth grade arithmetic when you
prepare your return. A doctorate in astrophysics isn't
going to help you if you have lousy records.

Not that you asked, but it seems silly to sell an investment
just to avoid a child's homework.

- quote -

When the fund distributes earnings matters only when you're
buying, not when you're selling.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I am going to need to redeem some or all of my shares in a
fund I've had for years.

I can sell all or a fraction of my shares but I don't know
which would be easier to calculate for my taxes next April.

Can someone give me a quick answer?
I have never redeemed shares before and the fund
distribution is in December I believe.

Thanks,

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >