When you open a mutual-fund account, you can receive dividends as cash or have them reinvested. You can also do this with stocks in either of these:
- Dividend-reinvestment program
- Employee stock-purchase plan
Most people reinvest their dividends, which buys more shares. However, when you buy shares through reinvestment, it’s like you received the cash and immediately bought more shares. You must keep track of the basis of each share when you buy them — whether directly or through reinvestment.
Earn extra income by setting up a plan that will earn money as time goes on – even when you are not physically working. Learn more at H&R Block.
How are mutual funds taxed when sold? Learn more about reporting mutual fund sales with the tax experts at H&R Block.
Can you claim a capital loss on inherited property? Learn more from the tax experts at H&R Block.
Learn more about the adjusted cost basis method of selling shares and get tax answers at H&R Block.