Ordinarily, money market funds are priced at $1.00 per share so that when any cash is used to purchase money market shares, cost basis is $1.00. If those same money market shares are used to purchase another investment, the shares are then sold at $1.00. There is no gain or loss when your typical money market fund is bought and sold when the shares are always priced at $1.00. You may owe tax on the interest that you money market fund earns, and in that case, your firm may send you a 1099-B reporting the interest earned or a 1099-INT reporting the interest earned.
Because it appears that you may own a tax exempt money market fund, your shares may fluctuate in price. In other words, you might have purchased shares, or reinvested interest/dividends, at prices other than $1.00. Your 1099-B will provide the details of any gains or losses upon the sale of your tax exempt fund. You may owe tax on any gains. Moreover, any loss might be able to offset some of your ordinary income. TurboTax will calculate any tax you owe on your gains, and what income, in any, your loss can offset.
If the money market fund is tax exempt, you will not owe federal income tax on the interest earned, but you might owe state income tax depending on how your state taxes funds of this type.
@magassoc
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