# Capital gain calculation on mutual fund

klauJanuary 3, 2012

Does anyone have any idea how to calculate capital gain/loss on mutual fund using the average cost single category? To be specific, I'm considering to cash out one of the fund that I have invested "monthly" for 7+ years. Technically, the monthly investment and the dividend reinvestment that were made within the past 12 months are considered short term investment with a 28% tax rate while investment made over 12 months ago should be considered long term with 15% tax rate. How do I calculate it using the average cost single category method?

Thank you for reporting this comment. Undo
raee_gw

Add up all the purchases (the cash out of your pocket that you paid to buy shares), along with any dollar amounts reinvested, and don't forget any amount that you had to pay for an investment fee (for example if a percentage of your initial investment went to pay a broker or a "load" rather than actually buy shares). This is your total cost basis. Divide this amount by the total number of shares that you now own. The resulting figure is your average cost per share.
You will then subtract the average cost/share \$ amount from the price per share that you sell for, and that will be your capital gain (or loss) per share. Times number of shares sold is the total gain or loss. If you include all your shares (both long and short term) in this calculation, that is the single category method. You will have the same cost basis for all shares, although the short term and long term shares will be taxed at separate rates.

However, in certain circumstances you may want to go to the trouble of separating your long term and short term shares into separate sales and calculate the cost basis of each group separately. Say, if by separating the two groups, and calculating an average cost basis for each group, you would be selling one of the groups at a loss or at a significantly smaller gain and so reducing the total amount of tax owed. This would take some time to figure out but still is not that hard.

January 4, 2012 at 4:36PM
More Discussions
Hi: I am hoping I can find someone on the forum who...
mistopheles52
Family Banking Concept, anyone heard of it?
I did a search here and did not see any similiar thread....
rjinga
How would I sell fur coats?
Let me say, first, please donĂ‚t bash me for having...
linnea56
Spending Breakdown
My wife and I have tracked our spending over the last...
rjexit5
I NEED to vent!
I am so UPSET Just received a notice from my credit...
KarenPA_6b
Sonneman Capital Modern Contempo Mini Pendant
1800Lighting
Capital Lighting Modern Contempo Flush Mount
1800Lighting
EPCO 107mm Personalized Tournament Bocce Set - 4200 W/999 REDBAG
\$169.98 | Hayneedle
kathy ireland Home by Martin - Carlton TV Console Corner Unit - CN351
\$465.00 | Hayneedle
Capital Lighting Soho Modern Contempo Bath Vanity Light
1800Lighting
Modern Indoor/Outdoor Area Rug: United Weavers Rugs Paris Black 7 ft. 10 in. x
Home Depot
Modern Industrial X-Back Arm Chair - Set of 2 - CH1196NC
\$610.00 | Hayneedle
Safavieh Indoor/Outdoor Area Rug: Safavieh Rugs Persian Legend Moss/Beige 8.2
Home Depot
People viewed this after searching for:
© 2015 Houzz Inc. Houzz® The new way to design your home™