Basis

Things begin to get tricky when it comes to computing the basis of the shares you sold, in part because you have several choices of how to do it.

The IRS has developed some special methods for figuring the basis of mutual fund shares. Before discussing those methods in detail, however, it's worth looking a bit more closely at what exactly "basis" means in this context. For more information, refer to Original Basis and Reinvested Distributions.