Tax Question??

[shadowkat]

Spoke too soon. Have a question - does anyone out there understand how to figure out a
"cost basis"? If you don't know what it is, you don't know.

Comments

[rebekahroxanna.livejournal.com]

Is it stock? Did you buy it all at once? Have you reinvested dividends? Has the stock split? Was it a gift or an inheritance?

I use the cost basis my mutual fund company gives me. It's just easier than trying to figure everything out (and with mutual funds it gets really complicated because you pay tax on the capital gains that are reinvested and then increase your basis). There's also the matter of matching purchases and sales and as I recall you have to use the same scheme every time (match first purchase with first sale or last purchase with first sale, but I may be confused.)

[embers-log.livejournal.com]

I always had a tax accountant determine it for me, basically it is the difference between the original value of the stock (or mutual fund) and the value when you sold it, in order to determine how much you owe for Capital Gains... but you should be able to deduct fees etc...
Google had some good sites:
http://www.investopedia.com/ask/answers/05/costbasis.asp
http://www.irs.gov/faqs/faq-kw34.html
http://mutualfunds.about.com/od/taxes/a/basis.htm
I know...you probably googled it your own self.

[cactuswatcher.livejournal.com]

The cost basis is basically what you paid for it. Depending on what you have you may have to reduce that, if you've gotten any of your original cost (the principle) back through payments at any time you've had it. If you have stock and it split, the cost now covers all of the shares not just the ones you originally had, and there can be complications with that as well.