A word to wise mutual fund owners
Many of you mutual fund owners have been receiving payouts annually, which most funds encourage people to reinvest, and many agree to that.
Someday, when you cash out (or die) you'll have to do some reporting to the income tax people (or the executor of your estate will - and will thank you for well-kept accounts, [even though you won't be able to hear the words of thanks]).
In most cases, they want you to pay tax on the increased value over the time that you held the asset.
Some people report that their cost was the amount that they paid in the first place, and subtract that from the current value.
You should keep track of all of those annual payouts, that you had to report as current income in the year that they were (supposedly) received. For you added those amounts back into that asset, just as though you'd added new money.
When you sell, the amount originally invested, plus those annual payouts that were reinvested, are your cost base - and that's the amount that you need to deduct from your selling price.
If you don't - you'll be paying tax on the interim income twice.
And I don't think that you want to do that.
If you want to make a gift to the tax people - that's deductible, I think, usually. Don't give them a free bonus.
Have a great week.