foreign taxes paid

Foreign tax paid has nothing to do with your basis. It IS however a deduction on that year's form 1040 on page 2. See form 1116 and use it if you must, but you may not have to, rather enter foreign tax paid on the appropriate line.

ChEAr$, Harlan Lunsford, EA n LA

sandybeth wrote in news:2d996ac8-4c30-4fe3-96a3- snipped-for-privacy@41g2000hsc.googlegroups.com:

You are probably doing it wong. If you look at your statements, you will probably see that the total cost of the shares purchased after the fund paid out is the net after the foreign tax, not the gross which is what you see on the 1099-Div. Until you sell it isn't an issue though.

For me, Schwab seems very bad about not providing any info on the gross divs nor foreign tax until the 1099 comes out in early Feb, too late for the Jan 15 est tax payment date.

scott s. .

OK, Scott, so assume I am going to sell. Which figures do I use to come up with the cost basis? The figures from the 1099-DIV or the ones from the end-of-year statements with the foreign tax missing (but, as you say, has already been deducted from the reinvested divs and CapGns)? The Div figure on the 1099-DIV is higher because of foreign tax added in, so it will make for a different cost basis. The foreign tax is never listed on any of my Templeton quarterly statements, only on that yearly 1099-DIV.

The amount you reinvested to purchase new shares is the cost for those shares. Your Fund's statements tell you how much was reinvested. Use the statements.

The 1099 infomation is for tax reporting purposes only, and even there, the fund is adding confusing information to the

1099. Specifically, short term gains of the fund has no purpose on a tax reporting form, and IMO should never be shown on a 1099.

Many funds today provide average cost information which makes the tax reporting task much easier. If your fund does not, you might consider another fund family.