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?
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. For the purpose of determining your holding period using the single-category method, the shares disposed of are considered the shares that you acquired first. When using the double-category method, you need to determine the holding period for each share based on the trade date the share was acquired, then assign the share to either the short-term category (held one year or less) or the long-term category (held more than one year).
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 an average basis method for computing basis of mutual fund shares upon sale, how do I determine the holding period for those shares?
- If I elect to use the average cost method for covered and uncovered shares, how will Vanguard determine which shares are being sold?
