Re: Q: Handling Basis Adjustments Resulting from Wash Sales
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Posted by Mark on January 09, 2000 at 21:36:55:
In Reply to: Re: Q: Handling Basis Adjustments Resulting from Wash Sales posted by Sam C. on January 09, 2000 at 20:55:21:
: : : What's the accurate way to adjust your basis as a result of a wash sale
: : : in FM? I sold some shares of a fund at a small loss within 30 days of
: : : making a purchase. Also, a few weeks later, I reinvested a distribution
: : : in the same fund, requiring another basis adjustment. I know how much to
: : : adjust the base; I just don't know how to record it in FM or what date I
: : : should assign the transaction. Any suggestions would be appreciated. : : : Thanks,
: : : Sam C. : : Hi Sam C.
: : There are three things that affect your cost basis: : : 1) The purchase cost
: : 2) Account Fee Distributions
: : 3) Return of Capital Distributions : : Account fees increase your basis, while a return of capital distribution
: : decreases your cost basis. : : Reinvested distributions, are treated as a distribution, and a purchase.
: : So, if the distribution is not one of the account fee or return of cap. types,
: : it won't affect the basis, but the purchase involved in the reinvestment
: : will increase your basis, for when you sell those re-purchased shares. : : Thanks,
: : Mark
: : --
: : Mark Beiley : Hi Mark,
: Thanks for the response. I may not have asked my question clearly. It's my
: understanding (and illustrated very well at the fairmark web site
: [http://www.fairmark.com/capgain/ws101.htm is the specific link]) that any
: capital loss disallowed as a result of a wash sale is added to the basis of the
: replacement shares. This allows you to "realize the loss" when you sell the
: replacement shares at a later date. So, is there a way in FM to "adjust the
: basis" of the replacement shares to reflect the consequences of the wash sale? : Thanks again,
: Sam C. Hi Sam,
Thanks for the link, that was a good tuturial on wash sales. There isn't
a mechanism built into Fund Manager to deal with this. About the best solution
I can think of is to just enter the purchase price at the higher price,
which would raise the cost basis. You could maybe add a note in the memo
section. This of course will make your ROI look bad for this investment,
but will allow you to track the capital gains correctly, factoring in
the adjustment for the wash sale. This is something we may add into a future
version. Thanks,
Mark
--
Mark Beiley
Fund Manager for Windows 3.1x/95/98/NT
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