J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

32.9 Basis of Redeemed Shares

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Planning Reminder

Keeping Track of Cost Basis

Keep confirmation statements for purchases of shares as well as a record of distributions that are automatically reinvested in your account. These will show the cost basis for your shares. Your basis is increased by amounts reported to you by the fund on Form 2439, representing the difference between your share of undistributed capital gains that you were required to report as income and your share of the tax paid by the fund on undistributed gains. Your basis is reduced by nontaxable dividends that are a return of your investment. Keep copies of Form 2439 and information returns showing nontaxable dividends.

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To figure gain or loss, you need to know the basis per share. Generally, your basis is the purchase price of the shares, including shares acquired by reinvesting distributions back into the fund, plus commission or load charges.

Load charges.

Basis does not include load charges (acquisition fees) on the purchase of mutual-fund shares if you held the shares for 90 days or less and then exchanged them for shares in a different fund in the same family of funds at a reduced load charge.

EXAMPLE

You pay a $200 load charge on purchasing shares for $10,000 in Fund A. Within 90 days, you exchange the Fund A shares for Fund B shares. Because Fund A and Fund ...