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 Topics

Related Resources

myRA Retirement Plan

Learn more about the myRA retirement planning account by the U.S Treasury Department from the tax experts at H&R Block.

Gambling Winnings Tax

Learn more about the gambling winnings tax and form w-2g from the tax experts at H&R Block.

Powerball Taxes: Are Lottery Earnings Taxable?

Would winning the lottery affect your taxes? Learn more about how your taxes could change after a Powerball payout with H&R Block.

Reporting Business Income Or Loss

How should you report business income or a loss? Learn more about self-employment income, hobby loss rules and other tax issues at H&R Block.