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]

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.