In February I exchanged about $75k dollars of a mutual fund for another fund within the same firm. I did not receive any cash from this exchange. Is this a taxable event that needs to be reported on Schedule D? I think so, but I want to be sure.
Also, since the shares that I sold had hold times ranging from 1 month to 10 years, how do I determine what amount of the proceeds is long term and what is short term?
Thanks, Mark
Yes, assuming this is not in an IRA or other deferred plan, the "exchange" is treated as a sale of one fund and opurchase of another fund.
Either you have kept very careful records and can find which shares were purchased (perhaps by reinvestment) within a year of sale, and the amount paid, or you can use an averaging method of determining cost basis. Chances are the fund uses Type I averaging, and it's simple for you to pick that up.
Using Type I cost averaging, if 1.378% of the shares were purchased within one year before sale, then 1.378% of the Total Sales is allocated as short-term.
The fund might give you that information. It might be available now if you look at your account online, or they might provide it with the 1099-B that they send you at the end of the year.
Bob Sandler
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