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Merlo
Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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WHEN SELLING A MUTUAL FUND AND/OR A MONEY MARKET FUND, DO

Resolved Question:

WHEN SELLING A MUTUAL FUND AND/OR A MONEY MARKET FUND,
DO YOU NEED TO REPORT IT TO THE IRS LIKE YOU DO FOR STOCKS
ON SCHEDULE D, CAPITAL GAIN OR LOSS
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.
HelloCustomer

Yes, you report the sale of mutual funds exactly like you would a stock.

The only difference with the sale of a mutual fund is that you can choose a couple of different methods for determining your basis. With a regular stock, if you made multiple purchases of the same stock, then when you sell shares of that stock, you use the cost of the first shares purchased as the ones being sold.

With the sale of a mutual fund, if you have multiple purchases of the same fund, you can average your cost of all the purchases and use your average cost as your basis. Other than that, the sale itself is reported the same way as a stock. If the fund was held less than one year it is reported on Part I of Schedule D as a short term sale and if it was held for more than one year then it is reported in Part II as a long term sale.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank youCustomerbr />
Customer: replied 4 years ago.

OK, NOW I UNDERSTAND FOR MUTUAL FUNDS,

BUT I ALSO ASKED FOR MONEY MARKET FUNDS?

Expert:  Merlo replied 4 years ago.
Hello againCustomer

Is this a regular money market fund that you have been paid interest on each month while you owned it?

When you got rid of the money market fund, did you actually have a gain or a loss from your original investment in the fund?

Customer: replied 4 years ago.

YES, PAID INTEREST MONTHLY

YES, I HAD A GAIN

 

Expert:  Merlo replied 4 years ago.
Hello againCustomer

One more question please. Is the gain you had due to the fact that you left the interest in the account?

Customer: replied 4 years ago.
YES
Expert:  Merlo replied 4 years ago.
Hello againCustomer

The money market fund is not like a mutual fund. It is really treated the same way as a savings account. In other words, when you own a money market account, you are generally paid interest every month or every quarter. At the end of the year, you will receive a 1099-INT form from the broker that reports the total interest you were paid, and the interest you earned is reported on Schedule B.

The money market fund itself does not fluctuate in price. When you sell or close the money market fund, you have no gain or loss, except for the interest you left in the account. But that interest is reported on Schedule B and the sale of the money market fund itself is not a reportable event because there is no gain or loss from the account. All you have there is the interest that was earned and that is reported on a a separate Schedule.

If this was helpful please press the Accept button.

Thank youCustomerbr />
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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Merlo
Merlo
Tax Professional
9783 Satisfied Customers
25+ years tax consulting. Specializing in returns for US citizens living abroad