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I am trying to calculate the cost basis of a mutual fund held in an investment account (rather than a tax-sheltered account), for tax purposes.

Date        Trade         Units     Unit Price  Amount
---------------------------------------------------------
2013-12-16  Purchase      881.0573  11.35       10,000.00
2013-12-20  Distribution   14.0908  11.34          159.79
2014-01-02  Purchase        8.7566  11.42          100.00
2014-02-03  Purchase        8.6957  11.50          100.00
2014-03-03  Purchase        8.4388  11.85          100.00
2014-04-01  Purchase        8.3822  11.93          100.00
2014-04-11  SALE          -63.7213  11.77          750.00

Now, I believe the way you do the math is fairly straight-forward. Distributions, in this specific case, are reinvested and so simply reduce the cost basis. So, we'd sum up all of the purchases, in this case $10,400. We'd sum up the units prior to the sale, in this case 929.4214.

That means the cost per unit is $10,400 / 929.4214, or $11.1898/unit. I sold 63.7213 units, which means the cost basis was $713.03, and so I owe capital gains on my profit, $750 - 713.03, or a profit of $36.97.

I don't think it makes any difference, but I'm located in Canada.

Have I done the above math correctly?

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You had the right idea, but made a minor mistake. Reinvested distributions are treated exactly the same as purchases in determining your average cost per unit, and although you added the # of units for it, you neglected to include the value of those units in the total.

Your math should therefore look more like this:

 Cost       Units      
 10000      881.057    
+  159.79  + 14.0908
+  100     +  8.7566
+  100     +  8.6957
+  100     +  8.4388
+  100     +  8.3822
=10559.79  =929.4211   

Avg cost/unit = 10559.79 / 929.4211 = 11.3617
ACB = 11.3617 * 63.7213 = 723.98

However, the total cost (10559.79) can be affected by the Return of Capital amount from your T3 form, so if you don't have one yet, you should wait for it to be issued before you complete this calculation.

  • I just received a T5008 (Statement of Securities Transactions) which confirms an ACB of $723. – ChrisInEdmonton Mar 3 '15 at 13:55
  • Good to know! And I guess if the bank is going to do the work for you on the T5008, this whole effort has been futile aside from a learning experience! By the way, where did that other less-useful answer go? I didn't know answers could be deleted... – Elbyron Mar 3 '15 at 17:51

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