Taxable event?


M

Mark

In February I exchanged about $75k dollars of a mutual fund for
another fund within the same firm. I did not receive any cash from
this exchange. Is this a taxable event that needs to be reported on
Schedule D? I think so, but I want to be sure.

Also, since the shares that I sold had hold times ranging from 1 month
to 10 years, how do I determine what amount of the proceeds is long
term and what is short term?

Thanks,
Mark
 
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A

Arthur Kamlet

In February I exchanged about $75k dollars of a mutual fund for
another fund within the same firm. I did not receive any cash from
this exchange. Is this a taxable event that needs to be reported on
Schedule D? I think so, but I want to be sure.



Yes, assuming this is not in an IRA or other deferred plan, the
"exchange" is treated as a sale of one fund and opurchase of
another fund.


Also, since the shares that I sold had hold times ranging from 1 month
to 10 years, how do I determine what amount of the proceeds is long
term and what is short term?

Either you have kept very careful records and can find which shares
were purchased (perhaps by reinvestment) within a year of sale, and
the amount paid, or you can use an averaging method of determining
cost basis. Chances are the fund uses Type I averaging, and it's
simple for you to pick that up.


Using Type I cost averaging, if 1.378% of the shares were purchased
within one year before sale, then 1.378% of the Total Sales is
allocated as short-term.
 
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B

Bob Sandler

Also, since the shares that I sold had hold times ranging from 1 month
to 10 years, how do I determine what amount of the proceeds is long
term and what is short term?
The fund might give you that information. It might be
available now if you look at your account online, or they
might provide it with the 1099-B that they send you at the
end of the year.

Bob Sandler
 

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