Mutual Fund Basis

[LawrenceGR]

I wonder how many, if any of you keep a basis for your clients? It seems to me that as tax preparers that is a little outside our responabilities. Am I wrong to assume this falls on the client's shoulders?

[Snaggletooth]

Hazy responsibility

Probably outside our scope, although I track my own mutual funds.

Very few clients will keep up with their own basis. Actually very few of
them are capable. Some of them understand the concept of computing
an increased basis per share as a result of reinvested dividends, but very
few could actually sit down and calculate it.

Fortunately, more and more funds are tracking basis for their shareholders
and show this on their year-end tax statements.

Of course, I offer this service for a fee, but I have only one client who
takes advantage of it. Turns out to be a time-consuming delve into history
when they don't have a clue. Most of them think they owe tax on the
entire increase.

Would be interested in others' comments.

[Kram BergGold]

basis

If my client sells a mutual fund and the fund did not track acb then I ask the client to bring me all the records they have and I reconstruct the basis. If this takes a few minutes then no charge. If we have to reconstruct 20 years then they are charged for my time.

[DaveO]

I track basis for a few clients.

The rest get charged if it's a big process. My biggest gripe are the people with managed accounts whose brokers claim it's not their responsibilty to track even the basis of stock. I have had brokers send me 20 years of records claiming they are not "qualified" to calculate the basis. I question if they are "qualified" to be money mangers.

[Chief]

Mutual Fund Basis

Vanguard does an excellent job for its clients in tracking basis for its funds. I would not use a fund that did not. Vanguard is also a low cost administrative fee for its funds. I transferred my resources to CD's in December. I lost my shirt back a few years ago when they were down. I waited until they were back up and rolled over the fundsinto CD's that fixed and FDIC insured.
I attended a seminr recent where the financial planner was pitching annuities as the safest investment. Everything except fixed cd's have risks involved. Retired people do not need to worry about risks to their investments. Of course if our government fails we are all out begging.

[Dervis]

CD risk

Everything except fixed cd's have risks involved.

The risk with CDs is called inflation. Many of them don't keep up with it.

[LawrenceGR]

annuities

are usally best for the person selling them. I don't want to start a big debate on investment planners, but I am NOT a fan. As you say Chief, Vanguard does a nice job for probably .75 to 1. % less than a lot of FP. I will admit you have to babysit your own funds but if the funds are spred out it will limit risk.

[ChEAr$]

using the Easy button

Seems to me that if all the years' dividends have been on the returns, even if they haven't
been actually, the only increase is that since the previous year's end.

So if a fund price was 20$ 12/31/06 and client sold it Feb 8th when share price is 21$,
you have a 5% increase. Thus the cost basis for a sale of, say 8000$ worth, would be
8000 / 1.05 = 7.619.

Assuming of course no investments this year.

[LawrenceGR]

Too many funds

There are a few differant funds and I only make copies of the consolidated report. That's what I'm trying to figure out, how many other folks actually keep copies of every fund. I have a dividend history but they are grouped together.

[taxea]

Mutual Fund Basis

I maintain that it is the clients responsibility to get the information required for the tax return. I tell them to call their investment company to get the info because it is confidential information and most companies won't give it to me without a power of attorney. I also charge for any research I have to do in order to obtain info they have failed to provide. I only research what is readily available...i.e. property tax...taxea