Ok ... you are confused. You paid taxes on the earnings (interest/dividends/cap gains) each year as they are earned... what you did with the earnings is immaterial. You do not pay taxes twice on the earnings.
Now with most mutual funds you allow the earnings you already paid taxes on to remain in the account and BUY more shares of the mutual funds. Thus your basis in the new shares are the earnings you paid taxes on. Thus when you sell off those shares you will have a basis in them just like all the other shares you owened. Did the broker's account form 1099-B account for the cost basis correctly ? Thus you do not pay taxes twice on the earnings due to the reinvestment. If you don't understand this concept or have questions on the broker's reporting statements then please contact them to be educated on this matter.
