Can't Find Your Cost Basis?

Are you scrambling to find your mutual fund cost basis this year? If you’ve transferred your accounts from one broker to another and subsequently sold a mutual fund, you’ve probably been burdened with trying to determine your cost basis in order to report your capital gains (and, of course, all of this at the last minute).

It’s generally not that difficult to determine the cost basis of a fund. The challenge arises if you purchased the fund many years ago and you didn’t keep your trade confirmations or statements. The reinvestment of capital gains distributions and dividends over a period of years can make the cost basis difficult to track down. Keep in mind, if you purchased a fund more recently, advisors and/or brokerage firms are tracking the basis for you.

There are software programs that will help estimate the cost basis as long as you know how much you originally invested (you need to add all capital gains and dividends that were reinvested in order to arrive at your cost basis). Of course, there can be other challenges -- maybe you sold some shares along the way. If that’s the case, there are four ways to calculate and report the gain on your shares.

If you’re not having any luck, the next step is making some educated guesses on the basis. Your tax preparer should be able to advise you.