Another problem can arise in determining your basis for shares sold, particularly if you are selling only a portion of your fund holdings and the shares were acquired at different times and at different prices. What is a sale. No one is likely to dispute the fact that a sale occurs when an investor has all of his shares in a mutual fund redeemed and receives a check for the proceeds. A less obvious sale occurs if you are merely swapping funds within a fund family, for example the surrender of shares of the X Income Fund for an equal value of shares of the X Growth Fund received in exchange. Even though no money passes hands, this is treated as a sale of the X Income Fund shares.
Many mutual funds provide check writing privileges to their investors.
However, each time you write a check on your fund account you are making a sale of shares in the fund. Do this 20 or 30 times a year and you are going to have a fairly complex capital gains schedule attached to your income tax return. Determining basis of shares sold. If an investor disposes of all of his shares in a particular mutual fund in a single transaction, determining basis is relatively easy. The calculation becomes more complex if the investor is disposing of only a portion of his interest in the fund and the shares were acquired at different times and at different prices.