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geowahl
Level 1

Sold my Money Market Fund (a Tax Exempt fund). What IRS Form should I get from my Mutual Fund company ? ?

How do I record the sale of a Money Market fund ?
1 Best answer

Accepted Solutions
ColeenD3
Expert Alumni

Sold my Money Market Fund (a Tax Exempt fund). What IRS Form should I get from my Mutual Fund company ? ?

Please see this response from HalAL:

 

You don't report it anywhere. That is why you did not receive  form 1099-B, for the sale of a security. Money Market Funds do not gain or lose value. When you  take money out (sell your shares), it was the same amount you put in.

Separately, you will receive a form 1099-INT for the interest earned by the account.

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7 Replies
ColeenD3
Expert Alumni

Sold my Money Market Fund (a Tax Exempt fund). What IRS Form should I get from my Mutual Fund company ? ?

Please see this response from HalAL:

 

You don't report it anywhere. That is why you did not receive  form 1099-B, for the sale of a security. Money Market Funds do not gain or lose value. When you  take money out (sell your shares), it was the same amount you put in.

Separately, you will receive a form 1099-INT for the interest earned by the account.

DJS
Level 7
Level 7

Sold my Money Market Fund (a Tax Exempt fund). What IRS Form should I get from my Mutual Fund company ? ?

Money market funds may offer you access to your funds through drafts, checks, debit cards, online funds transfer or other methods. Since the net asset value of your shares of a money market fund are typically maintained at a stable rate of $1 per share, you usually have neither a gain or loss on your sale of shares. There is no tax consequence to selling your mutual fund shares as long as the net asset value remains stable. You may receive a 1099-b, or maybe not. Check with you broker. 

Answers are correct to the best of my ability but do not constitute legal or tax advice.
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fanfare
Level 15

Sold my Money Market Fund (a Tax Exempt fund). What IRS Form should I get from my Mutual Fund company ? ?

You won't report money market sales UNLESS the fund breaks the dollar and doesn't refund you $1.00 per share.

This is uncommon.

Meanwhile the fund will send you 1099-DIV for any amounts earned on your money (your fund pays dividends, not interest)

magassoc
Returning Member

Sold my Money Market Fund (a Tax Exempt fund). What IRS Form should I get from my Mutual Fund company ? ?

It was reported on my 1099-B

GeorgeM777
Expert Alumni

Sold my Money Market Fund (a Tax Exempt fund). What IRS Form should I get from my Mutual Fund company ? ?

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

magassoc
Returning Member

Sold my Money Market Fund (a Tax Exempt fund). What IRS Form should I get from my Mutual Fund company ? ?

Ho w do I know if it is tax exempt. We have no state tax in Texas.

 

Thanks

DianeW777
Expert Alumni

Sold my Money Market Fund (a Tax Exempt fund). What IRS Form should I get from my Mutual Fund company ? ?

It depends.  First you should receive Form 1099-B if you actually sold or redeemed your tax exempt security.  Then the sale or redemption is not tax exempt and would be reported as a sale for tax purposes. The gain or loss would be included with your other taxable income. 

 

The interest on the bond is not taxable, but  the capital gain on the sale is. Any capital loss on the sale is deductible.

@magassoc

 

Please update here if you need further assistance.

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