[GregWeld]

Life -- according to Schwab....



Average cost basis is one method to determine the cost of mutual fund shares at the time the shares are sold or redeemed. Schwab uses the single-category method, which simply divides the total dollar amount invested in a particular fund position by the number of shares held prior to the sale trade date. Reinvested dividends are considered actual fund purchases and are included in the cost basis.


In other words -- you'll have to do the work yourself. But remember this.... There's the IRS rules of engagement -- and Schwabs way of calculating for it's retail customers... and only your accountant can tell you (once you have a real actual realized gain/loss) what is correct. Most people just use an "average cost" to determine their cost basis. Because for many folks -- their stocks are held in IRA's etc for LONG periods of time -- and the thing gets so jumbled up that it doesn't pay to have an accountant try to determine the actual cost for stocks you bought 30 years ago - and have been receiving dividends (re-invested) all these years.

It makes no difference for accounting purposes NOW -- other than YOU want to know.... IF your shares are held in tax deferred accounts.... because there's no capital gains taxes to calculate until after you start to withdraw. Then - because this money (IRA/401k's) was "TAX DEFERRED" it is assumed that you now owe taxes on all of it at the current income tax rate. The old "Gotcha".