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I sold $14,000 of mutual funds I got from my parents, does the IRS count all $14000 as income? |
The mutual funds were purchased years ago for a modest gain. I used the money as a down payment on our house. Married, 2 kids $65k income. HELP// Your best bet is to contact the investment firm holding the mutual fund. None of the proceeds will count as "income", as your question asks. However, if the net proceeds exceed total cost to purchase the shares, any gain will be taxed as capital gain. On a partial share, a determination must be made as to which method is/was used to determine basis (FIFO, Avg Cost, etc). The reason you need to contact the investment firm is that you need to know several things. If some of the shares have been previously sold, you would need to know how that affected the cost basis; Were all the shares purchased at once, or were there regular reinvestments of dividends or year-end capital gain distributions? If previous sales occurred, what method was used to determine basis of shares sold? If so, the IRS says that same method now needs to be used for subsequent sales. If the shares were gifted to you, the original basis (total cost of all shares owned) follows the shares, and your gain/loss would be the same as the original owner (parents). If they were inherited, capital gain would only be calculated on any increase in value from their value at the time you inherited the shares. The investment company can provide account statements and tax forms to answer the questions you need to know before your questions can be answered fully. Well, you better talk to a tax advisor. You can call the IRS & they'll help you. The details matter. For example, if the funds were inherited, you only owe taxes on the difference between what the funds were worth when you inherited them, and when you sold them. They will tax the whole 14,000 G's. so start looking for some good tax deductions. If you have anamals give them names and use them as dependants they will tax the entire amount The IRS will not tax you on the amount of the sale. They will tax you on the CAPITAL GAIN of the sale. To determine the capital gain of the sale, you need to know the "cost basis" of the sale, or how much was paid for the mutual fund. Subtract the cost basis from the sale proceeds to determine the capital gain. |
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