Determining Cost Basis

Forum|Forum|8 months ago
October 1, 2025
1 reply
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I have a fund that was recently transferred from one broker account to another, and we are trying to update my cost basis. I have the basis since 2012. However, the basis prior to that did not transfer over. What is the tax rule on calculating a mutual fund tax basis. Can I use average cost or am I required to manually try to recreate it if I can recover the history (which may be hard to do given the long history)?

Mike9241

Level 15

transferring a mutual fund from one broker to another does not change its tax basis. how can you properly report their basis, except using specific identification, since you don't seem to know the basis for the earliest shares acquired? didn't you statements from the previous broker properly reflect the tax basis.

guidance is provided in IRS PUB 550 starting on page 67 as to allowable methods

https://www.irs.gov/pub/irs-pdf/p550.pdf

Mike9241

rcherinkaAuthor

Level 2

Thank you for your response. Unfortunately the pervious broker did not have the full history as it was transferred to them back in the 93. So, we have the details from 93 and those were transferred to the current broker. Its the longer term history that is the issue as that was before they had the statements online.

Opus 17

Level 15

I'm not sure we can help you, if you don't have your own records.

I believe your basis can be increased, if the funds pay dividends that are reinvested in the fund, but they are also declared on your 1099-DIV and you pay tax on them, they increase your basis. (Dividends that are used to buy new shares, that are not taxed to you at the time, do not increase your basis.)

If you bought shares over several years, and you don't have records, and the broker doesn't have records, I don't know what to tell you. Seems like the broker's job to keep track, whether they used paper ledgers or computers or an abacus. I might contact whoever regulates brokers in your state, or the SEC, and try to poke them to do a better job for you.

If audited, the IRS does not have to allow any basis you can't prove, so you should at least make the best, most reasonable estimates you can, and write them down with an explanation. You can update it with better facts if you get them.