How do you calculate cost basis for mutual funds?

Cost Basis Basics The average cost single category method calculates the cost basis by taking the total investments made, including dividends and capital gains, and dividing the total by the number of shares held. This single cost basis then is used whenever shares are sold.

How do you calculate tax basis?

With the single-category method, you add up your total investment in the fund (including all those bits and pieces of reinvested dividends), divide it by the number of shares you own, and voila, you know the average basis. That’s the figure you use to calculate gain or loss on sale.

How is tax calculated on mutual funds?

For equity oriented schemes, if the investment is held for 12 months or less, it is termed as short term capital gain and taxed at 15%. If the investment is held for more than 12 months, it is termed as long term capital gain (LTCG) and taxed at 20%, in case the total LTCG for the year is above Rs 1 lakh.

How do I calculate cost basis per share?

You can calculate your cost basis per share in two ways: Take the original investment amount ($10,000) and divide it by the new number of shares you hold (2,000 shares) to arrive at the new per share cost basis ($10,000/2,000=$5.00).

How do you calculate mutual fund basis?

To calculate average basis for mutual funds: Add up the cost of all the shares you own in the mutual fund. Divide that result by the total number of shares you own. Multiply the average per share by the number of shares sold.

What is the cost basis for mutual funds?

The cost basis for mutual funds represents the premium that the investor paid to buy the shares of a particular fund. Investors can calculate the cost basis of a mutual fund sale redemption by using an accounting method called the first in first out (FIFO) method.

What are the basis methods for mutual funds?

Investors can calculate the cost basis of a mutual fund sale redemption by using an accounting method called the first in first out (FIFO) method. Alternatively, investors can use the specific identification method or the average cost method although rules on calculating the cost basis for tax reporting purposes vary from nation to nation.

Is mutual fund tax free?

Tax-Exempt Funds. Mutual funds invested in government or municipal bonds, also called munis , are often referred to as tax-free or tax-exempt funds because the interest generated by these bonds is not subject to income tax.