Is cost basis a factor when reporting mutual fund capital gains on 1099-DIV

[g2kra]

Large amounts of capital gains from mutual funds reported on 1099-DIVs. Does cost basis considered? Amounts were all reinvested in the same funds.

[rjs · Accepted solution]

Cost basis is not a consideration for reporting capital gain distributions on a 1099-DIV. All you have to do is enter the amounts from the 1099-DIV as they appear on the form.

When you eventually sell some shares, you will have to report the basis of the shares that you sell. Reinvesting the dividends or capital gain distributions affects that basis because each reinvestment is a new purchase with a different purchase price. The mutual fund company keeps track of the basis for you. When you do sell shares, the 1099-B that they send you will show the basis of the shares that you sold.

[tanalin]

one last query: I have non covered shares in a mutual fund purchased in 2007.

Cost basis is indicated for those non covered shares in the mutual fund statement. So I know the cost basis of the shares till that point.

After 2011, the LT cap gains and dividends are reinvested but used to buy covered shares. The number of non covered shares does not change between 2011 and 2024. I sell half of the non covered shares in 2024. How do I go about calculating cost basis for those shares. This is puzzling, since the non covered shares are generating LT cap gains and dividends each year from 2012-2024 but they are used to purchase covered shares. 

The mutual fund company indicated that they were not reporting cost basis for those non covered shares but they do supply a figure. It is quite low. Is it accurate? I don't know if it includes LT cap gains distributions and/or dividend reinvestments from the period 2012-24. Or are these now considered cost basis for the newer covered shares only? 

or am i not understanding all this at all?! 

thank you