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# May I use the average cost of both covered and uncovered mutual fund shares in reporting the gain, or must I compute the gain for each category?

The average cost of the covered shares is considerable higher that the uncovered shares. The fund company split the proceeds of the transaction with the result that TurboTax computes the transaction as two sales, with a gain that is considerably higher than it would be if I simply used the average cost per share of all of the shares on the date of the transaction.

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## May I use the average cost of both covered and uncovered mutual fund shares in reporting the gain, or must I compute the gain for each category?

The only "category" that should make a difference in calculating gain is whether the transactions were short-term or long-term. __The overall gain (short-term plus long-term) should be the same whether you use average cost or specific lots, as long as your average cost calculation is correct.__

__If the sale of both lots (covered and non-covered) had the same character (i.e long-term or short-term), you can use the average cost for all the shares to calculate your gain. __

Otherwise, you would have to calculate the average cost of the short-term holdings, whether covered or non-covered, and the average cost of the long-term holdings, whether covered or non-covered.

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## May I use the average cost of both covered and uncovered mutual fund shares in reporting the gain, or must I compute the gain for each category?

The only "category" that should make a difference in calculating gain is whether the transactions were short-term or long-term. __The overall gain (short-term plus long-term) should be the same whether you use average cost or specific lots, as long as your average cost calculation is correct.__

Otherwise, you would have to calculate the average cost of the short-term holdings, whether covered or non-covered, and the average cost of the long-term holdings, whether covered or non-covered.

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It must be hard to answer, as the answer is hard to find on these message boards.

The mutual fund companies report two cost basis values, one for covered shares and one for non-covered shares. The IRS asks you to specify whether the shares being sold are covered or non-covered on both form 8949 and Schedule D.

It seems logical to use the two different values for cost basis.

But, you could calculate the cost basis of all shares sold (irrespective of covered and non-covered status) and use that cost basis in both 8949 forms.

That's the question - which way is correct?

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That leaves the un-covered shares.

the un-covered basis can be relied on if the broker supplies it.

the two figures should add to your total investment in the fund, including reinvested dividends, which is why you want to use the broker numbers. most people don't track reinvested dividends.