Selling a mutual fund
Hi Terry,
In 2019 I sold a Vanguard bond mutual fund and moved the money ($114500) to the Vanguard money market fund. The IRS is counting the entire $114500 as income and thus I owe @$20000. in additional taxes. Shouldn’t there be a cost or other basis? I didn’t make the entire amount in interest.
Thanks,
Terry Says
Big question: was this fund account inside an Individual Retirement Account? If so, and it was a traditional IRA, not a Roth, then the entire withdrawal is considered taxable income in the year withdrawn!
If this was not an IRA and you purchased the mutual fund some years earlier at Vanguard, with after-tax dollars, then they should easily be able to go back and give you your “cost basis.” Then you can prove to the IRS that only the amount above the cost basis was taxable.
And you should have done that in the year in which you made the withdrawal!
