Cost Basis
If you sell mutual funds or stock shares, it’s important you know the basis of the shares. Knowing the basis lets you accurately calculate your capital gain or loss. To calculate your gain or loss on the sale of the shares, subtract your basis from the amount you received for the shares.
When calculating the basis of stock or mutual fund shares you sell:
- Make sure the amount you’re starting with is correct. To learn more about your starting basis, see the Original Basis and the Shares Bought Through Reinvestment tax tips.
- Look at events that have happened since you bought the shares. Some might have changed the shares’ basis (Ex: nontaxable distributions). To learn more, see the Adjusted Basis tax tip.
You can use these methods to calculate the basis of mutual funds:
- Average-basis method
- Specific identification method
- First-in, first-out method
However, you can’t use these methods to calculate the basis for stocks.
Related Resources
Learn more about interest income and whether is qualifies as taxable or tax exempt interest income from the tax experts at H&R Block.
What is a capital gain or loss, and how do they affect your taxes? Learn more from the tax experts at H&R Block.
If you make a profit on the sale of your home, the gain may not be taxable. Learn more about the tax implications of selling a house with the experts at H&R Block.
How do hobby-loss rules affect your income and taxes? Learn about the hobby test and get tax answers at H&R Block.
