Capital Gains Report: Mutual Fund - Looking for AVG Cost Basis


J

Jim Silvia

Hi,

I'm trying to run a report for my mutual fund, that experienced monthly
contributions, to calculate the capital gains for several redemptions i've
made in 2008 for my taxes.

I changed the default option (Tools->Settings->Investment Settings) and have
unticked the "Track all investments as FIFO".

When i run the built in "Capital Gains" repot, it appears to be calculating
FIFO as it enumerates the gain/loss for each purchase transaction and
summarizes it.

I don't see an option for the investment/account to change/display the Cost
Basis method.

Any suggestions?

Thanks!
 
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C

Cal Learner-- MVP

I'm trying to run a report for my mutual fund, that experienced monthly
contributions, to calculate the capital gains for several redemptions i've
made in 2008 for my taxes.

I changed the default option (Tools->Settings->Investment Settings) and have
unticked the "Track all investments as FIFO".
The method of calculating capital gains for mutual funds can be any
of these methods for each fund. IRS rules require you stick with the
averaging method the first time you sell with that method for a
given fund.

AverageCostBasis(DoubleCategory) [default initially in Money]

AverageCostBasis(SingleCategory) [report by many fund companies]

ActualCostBasis

You select the method in the Details for each fund. Note that the
method of computing the basis of the shares you sell is independent
of which shares you are selling. Yes, that statement sounds strange.
By default, you are still selling FIFO. The tax cost *basis* of the
mutual fund shares you sell will vary according to the CostBasis
selection in Money. Note that stocks are always ActualCostBasis, but
you may be able to identify which shares you are selling.

Based on your observations, I did some tests. I entered three
transactions in a test file.

:Investment transactions
:All Investment Accounts
:
:
:
:Date Investment Activity Quantity Price Commission Total
:
:2/14/2005 fakex Buy 100 $10.00 1,000.00
:2/14/2007 fakex Buy 100 $2.00 200.00
:2/14/2009 fakex Sell 10 $3.00 30.00

During the Sell, I selected the oldest shares to sell. This is the
same result I would have gotten if selling using FIFO. If the fund
had been set for ActualCostBasis, the 10 shares sold 2/14/2009 would
have had a basis of $100. The average was 5.857142857 per share, so
the lot of 10 would have a basis of $58.57.


Since there were no Buys during the preceding year, SingleCategory
and DoubleCategory should give the same result.

Here is the resulting Reports->CapitalGains report:

:Capital gains
:Multiple Investment Accounts
:
:1/1/2009 through 2/14/2009
:
:
: Date Date Sale Purchase
:Investment Quantity Bought Sold Proceeds Cost Gain / Loss
:
:Long-Term Gains
:fakex 10 2/14/2005 2/14/2009 30.00 59.52 (29.52)
:Total Long-Term Gains 30.00 59.52 (29.52)
:
:Grand Total 30.00 59.52 (29.52)

So the calculations from the Capital Gains report are right. I also
generated a TXF file, and it reported the sale this way:

============================================
V040
AMicrosoft Money 17.0
D2/14/2009
^
TD
N323
C1
L1
P10 fakex
D2/14/2005
D2/14/2009
$59.52
$30.00
^
=============================================

The TFX format looks a little arcane, since it is for interpretation
by tax programs, but it is correct.


See below:
When i run the built in "Capital Gains" repot, it appears to be calculating
FIFO as it enumerates the gain/loss for each purchase transaction and
summarizes it.

I don't see an option for the investment/account to change/display the Cost
Basis method.

Any suggestions?
I think you will find the Capital Gains report, and the TXF file for
export to tax software, is correct.

However, based on your observations, I also tried the
CapitalGainsEstimator [In Money Plus, that is
Taxes->CapitalGainsEstimator->EstimateCapitalGainsTax].
The CapitalGainsEstimator does not correctly account for the
averaging methods. It uses the ActualCostBasis in its numbers,
regardless of the setting. This is correct for stocks. Fortunately,
this anomaly does not carry forth to the tax report generation for
your actual sales.
 
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J

Jim Silvia

Thank you!

My problem was looking for the cost basis setting in the Account (this is a
simple account with only one investment) instead of the investment level.
Your post prompted me to dig deeper and now i see the "Cost Basis" field at
the Investment detail.

The report is now returning what i expect and have manually calculated.

Thanks again!



Cal Learner-- MVP said:
I'm trying to run a report for my mutual fund, that experienced monthly
contributions, to calculate the capital gains for several redemptions i've
made in 2008 for my taxes.

I changed the default option (Tools->Settings->Investment Settings) and have
unticked the "Track all investments as FIFO".
The method of calculating capital gains for mutual funds can be any
of these methods for each fund. IRS rules require you stick with the
averaging method the first time you sell with that method for a
given fund.

AverageCostBasis(DoubleCategory) [default initially in Money]

AverageCostBasis(SingleCategory) [report by many fund companies]

ActualCostBasis

You select the method in the Details for each fund. Note that the
method of computing the basis of the shares you sell is independent
of which shares you are selling. Yes, that statement sounds strange.
By default, you are still selling FIFO. The tax cost *basis* of the
mutual fund shares you sell will vary according to the CostBasis
selection in Money. Note that stocks are always ActualCostBasis, but
you may be able to identify which shares you are selling.

Based on your observations, I did some tests. I entered three
transactions in a test file.

:Investment transactions
:All Investment Accounts
:
:
:
:Date Investment Activity Quantity Price Commission Total
:
:2/14/2005 fakex Buy 100 $10.00 1,000.00
:2/14/2007 fakex Buy 100 $2.00 200.00
:2/14/2009 fakex Sell 10 $3.00 30.00

During the Sell, I selected the oldest shares to sell. This is the
same result I would have gotten if selling using FIFO. If the fund
had been set for ActualCostBasis, the 10 shares sold 2/14/2009 would
have had a basis of $100. The average was 5.857142857 per share, so
the lot of 10 would have a basis of $58.57.


Since there were no Buys during the preceding year, SingleCategory
and DoubleCategory should give the same result.

Here is the resulting Reports->CapitalGains report:

:Capital gains
:Multiple Investment Accounts
:
:1/1/2009 through 2/14/2009
:
:
: Date Date Sale Purchase
:Investment Quantity Bought Sold Proceeds Cost Gain / Loss
:
:Long-Term Gains
:fakex 10 2/14/2005 2/14/2009 30.00 59.52 (29.52)
:Total Long-Term Gains 30.00 59.52 (29.52)
:
:Grand Total 30.00 59.52 (29.52)

So the calculations from the Capital Gains report are right. I also
generated a TXF file, and it reported the sale this way:

============================================
V040
AMicrosoft Money 17.0
D2/14/2009
^
TD
N323
C1
L1
P10 fakex
D2/14/2005
D2/14/2009
$59.52
$30.00
^
=============================================

The TFX format looks a little arcane, since it is for interpretation
by tax programs, but it is correct.


See below:
When i run the built in "Capital Gains" repot, it appears to be calculating
FIFO as it enumerates the gain/loss for each purchase transaction and
summarizes it.

I don't see an option for the investment/account to change/display the Cost
Basis method.

Any suggestions?
I think you will find the Capital Gains report, and the TXF file for
export to tax software, is correct.

However, based on your observations, I also tried the
CapitalGainsEstimator [In Money Plus, that is
Taxes->CapitalGainsEstimator->EstimateCapitalGainsTax].
The CapitalGainsEstimator does not correctly account for the
averaging methods. It uses the ActualCostBasis in its numbers,
regardless of the setting. This is correct for stocks. Fortunately,
this anomaly does not carry forth to the tax report generation for
your actual sales.
 

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