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?
How you determine the holding period of mutual fund shares you sold depends on which of the two average basis methods you are electing to use. Once you have elected a method, you must use that method for determining the basis of any shares sold in the future from that fund. You may specify top your broker the category from which the deemed shares are sold. Shares will be deemed sold from that category so long as your broker provides you with confirmation of the sale. If you do not specify or if the broker fails to provide confirmation shares will be deemed sold first from the long-term category.
