Any CPAs/tax experts here?

[oragator1]

I have a quick question in doing my taxes.
I held several mutual funds, and pulled some money out over the past year. They had all been held over a year, but dividends and capital gains are reinvested automatically, which I get at the end of every year and sometimes during the year as well. I assume if I am doing average cost on the sale they need to be shown as short term investments for purposes of the 1099-B because the reinvestments wouldn't have been held a year?

[ufhomerj31]

U don't know the answer, but next time do this in a Roth account to save the headaches

[oragator1]

Originally Posted by ufhomerj31

U don't know the answer, but next time do this in a Roth account to save the headaches

I have a Roth account as well, this is more of a rainy day easily accessible "cash" account. Most years I don't pull anything from it and when I do I am usually contributing during the year so it's a moot point, this is a unique year.

[oragator1]

I think I found the answer to my question after an hour or so of looking on the Fidelity site:

What cost basis methods are approved by the IRS?
The cost basis methods approved by the IRS include:

Average Cost
Using the average cost, cost basis is calculated based on the average price paid for all shares held, regardless of holding period. Gains or losses are defined as short-term or long-term based on the assumption that the oldest shares are sold first, even though the average cost is the same for all shares. This method of calculating cost basis is permitted for mutual funds only and cannot be used to calculate cost basis for individual securities such as stocks and bonds. Fidelity uses the average cost method when calculating your cost basis for all mutual fund shares.

https://scs.fidelity.com/webxpress/h...st_basis.shtml

So unless someone tells me I am reading it wrong, I am going with long term and saving some money, because there were more than enough older holdings to meet the 1 year criteria.

[mh2os]

Your brokerage statement should have the cost indicated on it as well as the sale price. The way the tax form is now arranged you have to state whether or not you are using the cost on 1099B or are using some other number. The IRS' presumption is that the amount on the 1099B is the correct amount.

[vaxcardinal]

these are long term capital gains. your statement will actually break out long-term and short-term. hope you're not doing your taxes by hand.

[oragator1]

Originally Posted by vaxcardinal

these are long term capital gains. your statement will actually break out long-term and short-term. hope you're not doing your taxes by hand.

Thank you and the others for the responses.
The 1099B I got from the mutual fund company was pretty thorough, only thing I didn't have was whether it was short or long as it's not on the form and since it wasn't broken out it was clear it was all receiving similar treatment So if you mean calculating the gain/loss, average cost etc then no, all that is on my 1099B, and I am using software so all taxes and applicable schedules are done for me, just didn't have that one piece of info.
If you mean not seeing a tax prep person, guilty as charged , but honestly my taxes are generally straight forward, the one time I did go they didn't find me anything I wouldn't have found. This was the first remotely complicated thing I have had in years.

[vaxcardinal]

I think few people actually need to have their taxes done by a professional. Tax software is simple enough to use that most folks should be able to use it with no problems. i'm surprised your long and short term capital gains were not broken out on your forms (mine always are). The info might be in statements accompanying your 1099B...like a detailed breakout of each purchase and sale.

[phatGator]

The Fidelity 1099 form does not show the cost basis, only the proceeds. My difficulty was what is average cost of the remaining funds after you've taken money out? That is, first withdrawal is easy to figure average cost. But once those are withdrawn, it seemed to me that the basis for average cost had to drop the cost of the shares sold. It didn't seem right, and definitely not advantageous, that under FIFO the cost of the early shares now withdrawn should still be included.

So I set up a spreadsheet to figure the average cost at the point of every withdrawal and then start calculating a new basis after each sale. Perhaps there is an easier way. At least this is the last year to deal with it. The fidelity funds are now closed.