I recently sold my mutual fund and it showed a profit from 2003-2011, they have an average cost single category for dealing with capital gains and I showed a profit in that time period. My question is the amount shown just a "raw" number so to speak without the average cost factor figured in?. I got the impression that my tax advisor will do the actual calculations to determine that what I owe and that I don't owe taxes on the amount shown as a profit. Hope this is not a dumb question....
At least in theory, the amount is supposed to include everything necessary to accurately reflect your average cost basis. What you mean by "the average cost factor figured in" doesn't mean anything to me. If you could elaborate on that point, it may help get you a better answer.
Also keep in mind that while the brokerages are required to report average cost basis you are NOT required to USE average cost basis for reporting if you choose to use a different method - such as specific identification, fifo or lifo. You would need to have the records to support the use of a different basis AND once you start using average cost basis you are locked into that method for that particular investment and the holdings in place at that time.
For funds purchased prior to 2012 (obviously the case for the OP, who sold the shares in 2011), brokerages are not required to report average cost, or any other cost, basis. Neither to you nor to the IRS. They may report some possibly real, possibly fictitious number to you, but they do not report it to the IRS (unless they have made an election to do so - highly unlikely).
Keep in mind that all the rules change for fund shares purchased since Jan 1, 2012 (and for stocks purchased last year, and for bonds purchased starting 2013). Then, the broker effectively becomes an agent of the IRS, and the method and shares you tell the broker (or let the broker choose by default) is effectively what you are telling the IRS. No chance to change your mind once the trade settles.
Regarding the original question - my guess is that the OP was wondering whether the cost shown by the brokerage was the actual cost of the shares, and whether the accountant had to somehow average the costs. The answer is no, but still yes. If a brokerage says that the number is an average cost, then it has already averaged the share costs. But yes, you (or your accountant) are the one responsible for the calculation. There are many reasons why the cost could be different from what the broker told you; even post 2012, it is your responsibility to get the numbers right. The only difference post 2012 is that if your numbers don't match those of the broker, you _will_ be asked to explain why. (Wash sales across accounts is an obvious case where the numbers won't match.)
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