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 Post subject: what's my tax liability for selling and reinvesting?
PostPosted: Fri May 18, 2007 8:09 am 

Joined: Thu Apr 19, 2007 7:58 am
Posts: 231
I want to dump a fund and switch the money to a different company. When I called about it a few weeks ago they told me that there would be no tax liability, something about I already paid the taxes on it...capital gains.... Unfortunatley I didn't understand what they meant and I put it on the back burner.

Now I'm ready to make the move and I wanted to find out how I should calculate my tax liability on the sale. Knowing that I'm taking my business away from them, I don't anticipate that they'll want to spend time helping me to understand the process.

Can anyone explain?


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PostPosted: Fri May 18, 2007 8:59 am 

Joined: Sat Apr 07, 2007 2:03 am
Posts: 872
Location: Taishan, Guangdong, China
Every year, mutual fund companies distribute capital gains and dividends independent on your buy/sell transactions. If you buy a fund for $100, it increases to $110 where $5 is cg/div, you pay tax on $5 immediately. That gets added back into your cost basis so your buy amount is $105, not $100. When you finally sell your fund shares, you then pay capital gains on $110-$105.

The only way to tell if you owe taxes -- or perhaps can even claim a loss due to increased cost basis -- is to look through all your statements.


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PostPosted: Fri May 18, 2007 9:10 am 

Joined: Fri May 04, 2007 8:14 pm
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I've posted a reply to you via PM. Check your inbox.


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PostPosted: Fri May 18, 2007 9:18 am 

Joined: Thu Apr 19, 2007 7:58 am
Posts: 231
Thanks for the replies.


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