How do I calculate the average basis for the sale of mutual fund shares?

To figure your gain or loss using an average basis, you must have acquired the shares at various times and prices.

To calculate average basis:

  • Add up the cost of all the shares you own in the mutual fund.
  • Divide that result by the total number of shares you own. This gives you your average per share.
  • Multiply the average per share by the number of shares sold.

If you wish to use the average basis to figure the gain on the sale of mutual fund shares, you must elect to do so. To choose the election, there are two separate processes for making the election for average basis method for covered and noncovered securities. See Publication 550, Investment Income and Expenses (Including Capital Gains and Losses) for information on how to make these elections.

If you were using the double-category method for figuring your average basis on stock acquired before April 1, 2011, refer to Publication 550.