Mutual Fund Basis Methods
For mutual funds, there are 4 basis methods approved by the IRS, detailed in Publication 564:
Cost basis methods:
- Specific share identification
- First-in, first-out (FIFO)
Average basis methods:
- Average cost single category (ACSC)
- Average cost double category (ACDC)
Starting in Jan 2012, broker/dealers are required to track cost basis on covered shares (shares purchased on or after 1 Jan 2012) and are required by law to offer at least the following 3 basis methods:
- Specific share identification (Spec ID)
- First-in, first-out (FIFO)
- Average cost single category
The following other methods are now available to be used as well:
- Highest-in, first-out (HIFO)
- Min Tax
- Max Gain
Read more about this topic: Cost Basis
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