Cost Basis of Money Market

[NN24]

The mother opened the custodian account for her son, but she didn't transfer it to her son all these years. Now, she's 88 years old and her son is 62 yrs old. The fund was transferred to abandon property in 2024 by Nationwide. After the son contacted Nationwide, they transferred the fund back to his account in 3/2025. He closed this account in 12/2025. The 1099 report the fund is NATIONWIDE GOVERNMEN T MONEY MARKET FUND INVESTOR CLASS IS without cost basis and not report to IRS as short term or long term. The Proceed (1d) is $1900. In this 1099, there is $80 shows as short term and $120 shows as long term and they are reported to IRS except $1900. Please help:
1. Does this sell count as short term (3/2025) or long term? Is it safe to select short term since the owner doesn't know about it?
2. Can the cost basis be calculated based on the beginning balance of January 2025 minus the $200?

The son is on disability. So, I just try to help them. Thank you for any information.

[DianeW777]

It depends. From what you indicated, if the mother opened the account more than a year ago, then it is likely long term for the most part. Any reinvested dividends within the last year would be short term. 

As far as the cost basis, there is only an amount allowed that was paid by the mother. Fair market value (FMV) is not part of the equation when it comes to a gift. Inheritance is another matter, but this is not an inheritance.

If you do not have the cost basis, then zero is the answer. This would make all of the proceeds taxable. If you have a general idea when the fund was opened and the amount used initially, then you could use that as your cost basis. The mother's cost basis-initial investment, plus any additional money she invested over time and any reinvested dividends if that applies, 

Any other amount should be able to be obtained from Nationwide.  It's not clear what form was received, however here are the instructions for investment sales.

To enter your sale in TurboTax, follow these steps. 

1. Open or continue your return.
2. Navigate to the investment sales section:
   • TurboTax Online/Mobile: Go to investment sales. If using this application, make sure it is open
   • TurboTax Desktop: Search for investment sales and then select the Jump to link.
     • Or Personal Tab > Continue > I'll choose what I work on > Scroll to Investment Income > Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other
3. Answer Yes to the question Did you sell any of these investments in 2025? 
   • If you land on  the Investment sales summary or Your investments and savings screen, select Add More Sales or Add investments.
   • Click this link for more information. Where do I enter Investment Sales?

[NN24]

 Should I select "Unknown term basis not report to IRS"? The cost basis is $1885.42 (the same as proceed) since it's a money market fund that attempts to maintain $1 / share in value. Someone said for a money market,  there is no sales proceeds / cost basis to be reported. Thank you.

[AmyC]

Yes. If the form does not report the basis, it is unknown by the broker and you select that box. 

A money market fund does try to keep the $1/share value. There should not be a capital gain from withdrawing the cash. It was  held long term since it was years ago - regardless of the moving around it did. The basis would match the proceeds of $1900 listed. I don't know where you got $1885.42, maybe taxes were taken out for the difference. If it is reported on a 1099-B, you must list the sale of the fund, long term, proceeds $1900, basis $1900.

Since the fund does earn interest / dividends that are added regularly to the account, account for them. You $80 short term and $120 long term. Enter these to match the 1099-DIV or 1099-B.

Since you are helping someone disabled, we definitely don't want the net gain to be $1900! Glad you are asking questions!

[NN24]

Thank you so much. I round it up to $1900 in the original post. The actual amount on the form is $1885.42 in box 1 d and $0 in box 1e for the money market. Turbo Tax popups the message that I need to mail this form in since it has no cost basis correct?

[AmyC]

No. Be sure to  enter the cost basis of $1885.42 and the same for the proceeds, long term, non-covered, you should be able to e-file.