The new cost basis reporting rules for mutual fund transactions went into effect Jan. 1, 2012. Under these new rules, the mutual fund company will use a default method to calculate the basis of shares acquired and sold in 2012 and beyond.
Strategy: Don’t assume the default method is best for you. Analyze all your options before you sell mutual fund shares. After you complete the transaction, it’s too late to change.
In many cases, you may benefit tax-wise by using a method other than the default method.
Here’s the whole story: In the past, you could use one of several cost reporting methods to figure out the taxable gain or loss, if any, when you sold securities. Best of all, you didn’t have to make the determination until tax return time, which gave you a great deal of flexibility. There was plenty of time to assess your optimal approach for your transactions for the year.
You don’t have that luxury anymore. Under a 2008 ...(register to read more)