A friend's Edward Jones financial advisor is using the Amount Invested and not the Cost Basis to compute the tax loss of selling a mutual fund.
I don't know anything about this stuff, but I'm pretty sure the financial advisor is wrong.
For tax purposes, do you always use the Cost Basis or the Amount Invested to compute the gain/loss?
Here are the definitions of the above terms directly from the Edward Jones website. It seems cut and dry that the Cost Basis should be used and that the Edward Jones financial advisor is wrong. But I am not educated in these matters, and I would hope they trained him effectively before making him a financial advisor.
Cost Basis is the amount paid for a security, including:
Commissions Fees Reinvested dividends and capital gains distributions (when applicable) Original Issue Discount (OID) Adjustments for sales of the security, principal returns, splits and spinoffs
Cost Basis is used to calculate the taxable gain or loss incurred when a security is sold. Cost basis figures provided by Edward Jones are believed to be reliable, but their accuracy and completeness cannot be guaranteed. Please consult with a tax advisor before using these numbers for tax purposes.
Amount Invested is the amount paid for a security, including:
Commissions Fees Systematic investments
Amount Invested keeps a running total of what you've invested in a security during the time it has been in your account, excluding reinvested dividends and capital gains distributions. It's a quick way to answer the question, "How much did I put in?" Amount Withdrawn shows how much of the investment has been sold, redeemed or transferred from your account. You should not use Amount Invested or Amount Withdrawn figures to report or prepare taxes.
The total amount invested/withdrawn may not equal the total amount of money deposited or withdrawn from the account. Amount Invested should not be used to determine overall account level performance since it represents securities that are currently in the account, and does not include any previously held securities. For more information on your overall account performance, please contact your financial advisor.