How do I figure out a mutual fund cost basis for my tax return?

March 3, 2012 5:48 PM

How do I figure out a mutual fund cost basis for tax purposes?

I'm trying to use TurboTax for my 2011 tax return. I sold some shares of a Vanguard mutual fund and imported the 1099-B and 1099-DIV into TurboTax. However, Vanguard does not allow cost basis information to be imported to TurboTax, so I have to enter that information manually. Which column on the 1099 shows me the cost basis? For example, for shares sold on Jan. 3, 2011, Vanguard lists $1,000 under "Proceeds," $960.49 under "Total Cost," $39.51 under "Gain/Loss", and $39.51 under "Total Gain/Allowable Loss". Is the $960.49 under "Total Cost" what I would enter for the cost basis in TurboTax?

posted by zembla3 to Work & Money (5 answers total)

Total cost is your cost basis. turbotax will then calculate your gain which should be the same $39.51.

(There are ways you can make this more complicated but this is the easy answer.)
posted by metahawk at 5:54 PM on March 3, 2012

Yes. The cost basis is what you paid for it.
posted by dfan at 6:42 PM on March 3, 2012

Not to complicate things but my (non-expert) understanding with TurboTax (at least with the Deluxe version) is that you have to enter in your short term cost basis separately from the long term cost basis. There are different ways you can calculate the cost basis. You would do well to check out IRS Publication 550 for more info, specifically this.
posted by scalespace at 9:37 PM on March 3, 2012

This is the first year that the custodians are required to include cost basis information. Be sure to double-check your own records to verify that your basis was in fact $960.49.

There is no such thing as "long-term cost basis". Basis is basis. The capital gain or loss is short or long term depending on whether you held the asset more than one year before selling.
posted by yclipse at 6:55 AM on March 4, 2012

The basis that Vanguard reports is computed using the average cost basis method. This is not the only method available and, in fact, is rarely the best method to rely upon if you're looking to minimize your tax liability. A good place to start to familiarize yourself with tax issues surrounding mutual fund holdings, ETFs, stocks, etc., is the Bogleheads Wiki.
posted by indubitable at 8:26 AM on March 4, 2012