Discussion:Tax on Mutual Fund Sales
From TaxAlmanac, A Free Online Resource
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Tax on Mutual Fund Sales
| 23 March 2007 | |
| I'm looking at a 1099 with gross proceeds around $300K related to the sale of Mutual Funds. The broker told me that there is no G/L on the sale since the average cost method is being used. Can someone please explain that to me further? I've been searching around and am not comfortable with it. It seems to me that even if the average cost method is used, that gain or loss would be calculated. What's the best way to deal with this? And what should be my next question for the broker? | |
| 23 March 2007 | |
| Ask the broker for a cost basis report. I don't think the broker knows about taxes at all. | |
| 23 March 2007 | |
| I asked him for that already and he told me that I did not need one since there is no gain or loss to report. I'm struggling here -- any other suggestions on the wording that I might be able to use with the broker? | |
| 23 March 2007 | |
| If the mutual fund trades at par (e.g., a money market fund trading at a constant $1 per share) then cost will equal selling price. If the shares fluctuate in value as any bond or equity fund will, there will be a gain or loss, average cost notwithstanding. Average cost method is a method allowed for determining gain or loss, but it does not mean there will not be a gain or loss. | |
| 23 March 2007 | |
| Ask for the Dec year end statement. If it is a brokerage account, it will also show "realized gains and losses" somewhere, for the year. That will confirm whether you need to look further or not. | |
| 23 March 2007 | |
| Ok .... clarification by the broker is that the proceeds were from a money market fund trading at a constant $1 per share -- just as Jdugancpa pointed out. I'm good to go now. Thank you for pointing me in the right direction. | |
| 23 March 2007 | |
| Make sure you list it on Sch D even though no gain or loss. | |
Death&Taxes (talk|edits) said: | 23 March 2007 |
| Shows the brokerage has lots of confidence in the Money Markets to assume it is a reportable trade. Makes you wonder if they expect them to trade at ninety cents a share. | |
| 23 March 2007 | |
| We are not sure yet that it is a money market mutual fund account. The broker is just blowing smoke up your *ss by using the term "average cost basis". SO, what IS the basis using the average cost basis rules? | |
| 24 March 2007 | |
| Seems strange to have a 1099B with 300k in proceeds for a money market fund. I don't know that I have seen that before. MM funds give an interest income 1099- int or a 1099-div for the amount of earnings. If the 1$ per share value has been maintained, as is nearly always the case.... The whole inventory method is irrelevant. (always going to be 1.00$) I would look at some statements or ask for the trading name of the security and make sure it is not some type of appreciating mutual fund. | |
Death&Taxes (talk|edits) said: | 24 March 2007 |
| Brokers now show redemption of CDs on 1099B, and this year I've seen at least one brokerage (Wachovia Securities?) show sales of money markets, but Kevin is correct. You have to check more; to quote a certain Mr. Williams, there is the smell of mendacity in the air. | |
| 24 March 2007 | |
| Depends on the nature of the fund. Most funds that require a $100K minimum investment will trade on a capital basis. CD's have always been gross proceeds. | |
| 28 February 2008 | |
| I also have a 1099-B here with a MM fund redemtion. Opened and redeemed in 2007. 25K beginning balance, 25,629.00 ending/redemtion. $629 was ordinary dividend reinvestment. Surely I don't have to show each dividend reinvestment at a constant $1 share price? Can I do this on one line (Scd. D)? Cost and redemption the same (25,629), -0- gain? And then account for taxable dividend?
They did get a 1099-DIV for 629.00, but it said info. was not provided to the IRS, for informational purposes only. | |
To join in on this discussion, you must first
log in.
