Tax return question re: mutual fund sale (calculate, transaction, credit)

[ansky]

I sold a mutual fund last year at a loss of about $200. (Principle was about $9000, sale price was about $8800). I received my 1099-B tax form and it says "Gross proceeds $8,800.00". There is nothing on the form that indicates any loss. How do I handle this on my tax return?

[Texas User]

You don't pay taxes on a loss infact I think there is some kind of credit you get for losses.

[Mike From NIU]

1099-B's don't detail the amount of gains or losses, only the proceeds from transactions, as you have found out. It is your responsibility to track and report your basis (cost) of the mutual fund shares on Schedule D. The amount of loss will carry over to page 1 of your 1040 and will offset ordinary income (salary, interest) from 2010.

The 1099-B does not report the cost or basis because many people accumulate shares at different times and may not liquidate the full holdings at once. Therefore, the IRS does not require the broker/mutual fund to determine which particular shares were sold and when said shares were acquired (ie, the information to determine basis and holding period).

So, to answer your question, you personally report the amount you paid for the mutual fund shares into Schedule D. That is how it is reported to the government and the determination of a loss is made. However, you will need to make sure you have the documentation that supports the cost basis in case you are audited. If you cannot provide this information (if you lost it, check with your mutual fund/broker for your account history), the IRS will assume your cost basis is $0 and you will owe capital gains taxes on the full proceeds.

[broadbill]

Sometimes your 1099-B does not have information to calculate the cost-basis of the trade (basically what you paid for it), so they can't determine if you had a gain or loss on it. You may have to figure out the cost-basis for yourself and report it on the capital gains worksheet of your taxes.

[qdogfball]

You can deduct all losses against your gains in stocks sold.

IE You sold mutual funds and made $10,000 in gains.

you also sold mutual funds and had $5,000 in losses.

You only pay tax on the $5,000 left.

Now, if you ONLY had losses, you can only deduct $3,000 per year. ($1,500 if married filing separately)

So, if you sold Mutual funds and lost $4,500, you can deduct $3,000 this year and $1,500 next year.

[ansky]

Originally Posted by qdogfball

You can deduct all losses against your gains in stocks sold.

Ok, so carryover losses from previous years can only be used to offset capital gains in the current year right? In other words, if I had no capital gains this year, the $3,000 offset from previous years doesn't benefit me at all? I was thinking the $3,000 carryover would reduce my current AGI by 3,000, but that doesn't seem to be the case.

[TKramar]

You still get the $3000 carryover, even if you had NO capital gains whatsoever. I did a return yesterday for someone who had a capital loss carryover from the previous year, and she had no capital gains at all, but a $3000 loss.

[Texas User]

You still have to report the 1099-B even on a loss. Its your benefit. You can claim it and some money back.