Calculating average cost basis for taxable mutual fund

[dan20152]

  I received a 1099-B for tax year 2020 from Fidelity because I cashed in 1,450.326 non-covered shares at $13.79 per share equalling $20,000.00 from a taxable mutual fund. This is the first time I cashed in since opening the fund in 1996. I need to figure out the average cost basis. In addition, I will cash in another 1,500 shares in June 2021. I also receive a 1099-DIV for 2020 which capital gains and dividends were reinvested.

  I have all my quarterly and yearly statements going back to 1996.

  In figuring the average cost basis, do I include or exclude the sales and creation charges and custodian fees when figuring out the average cost basis per share method? For example, transaction amount = $166.66, sales and creation charges = $1.79, custodian fee = $0.75, and therefore, net amount invested = $164.12.

I had capital gain distributions and ordinary dividends in December 2020. Will I have to figue the average cost basis again in 2021 when I cash in 1,00 more shares since I have gained more shares at the end of the year for 2020?

  I would appreciate any confirmation that I am on the right track or not.

[fanfare]

Refer to IRS Pub 550 chapter 4 for the real scoop on how to use average price per share of mutual funds.