After the first partial sale of mutual fund shares, are the sold shares no longer used when updating the average cost basis for future sales?
If you used the single-category method, the average per-share basis is the same for the shares you still hold as the ones you sold. The next time you sell shares, the per-share basis will remain the same unless you acquired additional shares in the meantime. If you subsequently sell some shares and have acquired additional shares since the last sale, you recompute the average basis. Divide the total cost of the shares that you hold at the time of sale by the number of shares you hold at the time of sale. If you used the double-category method to compute an average basis previously, you need to transfer from the short-term category to the long-term category any shares that have been held longer than one year at the time of a subsequent sale. Transfer the shares at the per-share basis for the short-term category computed at the time of the last sale, then recompute the average basis for the two categories. Use the new total cost and total number of shares for each category. For more info
Related Questions
- I have used the FIFO method to determine the cost basis for a sale of a portion of a mutual fund holding. Must I continue to use this method for all future sales of this fund?
- If I use the average cost method for computing basis of mutual fund shares upon sale, how do I determine the holding period for those shares?
- If I use an average basis method for computing basis of mutual fund shares upon sale, how do I determine the holding period for those shares?
