Comments on: How do I report a mutual fund that was rolled over to buy more mutual funds? http://www.secretfinance.com/blog/how-do-i-report-a-mutual-fund-that-was-rolled-over-to-buy-more-mutual-funds/ Thu, 17 May 2012 20:00:27 +0000 http://wordpress.org/?v=2.7 hourly 1 By: cynic47 http://www.secretfinance.com/blog/how-do-i-report-a-mutual-fund-that-was-rolled-over-to-buy-more-mutual-funds/comment-page-1/#comment-1768 cynic47 Thu, 26 Mar 2009 11:58:06 +0000 http://www.secretfinance.com/blog/how-do-i-report-a-mutual-fund-that-was-rolled-over-to-buy-more-mutual-funds/#comment-1768 You don't need to "get cash" to have a capital gain or loss. From your description, it appears that you sold the first two funds to get money to buy the last three funds. When you sold the first two funds, the amount you received for them determines whether you had a gain or a loss on each, which you have to report on your tax return. Then, your initial investment (or "basis") the in the last three funds is the amount you paid to buy them, not the amount you paid to buy the first two funds which you later sold. Summary: Report all 5 transactions as if you sold the first two funds for cash, and then bought the last three funds also for cash. You don’t need to “get cash” to have a capital gain or loss. From your description, it appears that you sold the first two funds to get money to buy the last three funds. When you sold the first two funds, the amount you received for them determines whether you had a gain or a loss on each, which you have to report on your tax return. Then, your initial investment (or “basis”) the in the last three funds is the amount you paid to buy them, not the amount you paid to buy the first two funds which you later sold.

Summary: Report all 5 transactions as if you sold the first two funds for cash, and then bought the last three funds also for cash.

]]> By: efflandt http://www.secretfinance.com/blog/how-do-i-report-a-mutual-fund-that-was-rolled-over-to-buy-more-mutual-funds/comment-page-1/#comment-1767 efflandt Thu, 26 Mar 2009 11:14:04 +0000 http://www.secretfinance.com/blog/how-do-i-report-a-mutual-fund-that-was-rolled-over-to-buy-more-mutual-funds/#comment-1767 It is very unlikely that the original 2 funds were sold for exactly what you paid for them. So you likely do have some gain or loss on them. If these are in a taxable account, you need to account for the cost basis of the original 2 funds (ie, the total you paid for all shares, including any dividend reinvestment). Otherwise the gov't would think the liquidation (sale) of those funds to buy the other funds was 100% profit. However, if this all took place within and remained within an IRA or other qualified retirement account, there would be nothing to report about any sales. It is very unlikely that the original 2 funds were sold for exactly what you paid for them. So you likely do have some gain or loss on them.

If these are in a taxable account, you need to account for the cost basis of the original 2 funds (ie, the total you paid for all shares, including any dividend reinvestment). Otherwise the gov’t would think the liquidation (sale) of those funds to buy the other funds was 100% profit.

However, if this all took place within and remained within an IRA or other qualified retirement account, there would be nothing to report about any sales.

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