Reporting Mutual-Fund Share Sales in header of articles
Reporting Mutual-Fund Share Sales
You can choose from three methods to report the sale of mutual fund shares. Once you choose a method, you must stick with it as long as you own shares of that mutual fund. However, you can use different methods for different mutual funds
These are the three methods:
Average basis -- This is the average cost of all the shares you bought. To learn more, see the Average Basis Method -- Mutual Funds tax tip.
First-in, first-out -- You assume that the shares you sold were the first ones you bought. To learn more, see the First-In, First-Out Method tax tip.
Specific share identification -- You identify the actual shares you want to sell to minimize your capital gain or maximize your loss.
Also, when figuring the basis of your mutual fund shares, include these:
Reinvested capital-gain distributions
Net undistributed long-term capital gains
Previously reported wash sales
To learn more, see Publication 564: Mutual Fund Distributions at www.irs.gov.