Individual Investors

Tax Center

Additional Resources

Here are some additional resources to help you with your 2011 tax planning.

Calculating Your Cost Basis

Your cost basis is the original cost of your investment, including any reinvested dividends or capital gains distributions. If you received a nontaxable distribution, your cost basis should be reduced by the amount shown in column 3 of your Form 1099-DIV. The cost basis is then subtracted from the redemption or exchange proceeds to determine any capital gain or loss. The IRS allows four ways to calculate cost basis, described below, and each method can result in a different tax liability. Once a method has been selected, it must be used for as long as you own that particular fund.

Virtus Investment Partners provides cost basis using the average cost/single category method to most mutual fund shareholders, with some exceptions*.  This information is not provided to the IRS, and it does not have to be included on your tax return. If you use the average cost basis provided, you and your tax preparer are responsible for the accuracy of your tax return.

* Exceptions: You will not receive average cost information if:

  • There were no sales or exchanges in your account in the current tax year.
  • Your account is a retirement account.
  • You hold a money market account since the fund maintained a $1.00 per share value.
  • Your account was opened before 1991.
  • Your account was transferred from another account before 1999.
  • Your account was established as a result of a fund conversion.  

Calculation Method: First In/First Out

The first shares bought are considered the first shares sold.

The IRS assumes this method is being used unless otherwise informed in writing. This method can create the largest tax burden for a shareholder since shares that have been held the longest tend to have the largest capital gain.

Calculation Method: Average Cost/Single Category

Gains or losses are based on the average price paid for all shares, regardless of how long those shares have been held.

Average cost-per-share is calculated by dividing the total cost of all shares purchased, including reinvested dividends and capital gains, by the number of shares owned. This method assumes that oldest shares are sold first and can reduce the amount of an investor's capital gains if the fund's net asset value has increased over time.

Additional Information for Calculating Average Cost/Single Category Cost Basis
Note: Cost basis was calculated using this method for shareholders for whom average cost basis was reported on Form 1099-B.

Calculation Method: Average Cost/Double Category

Averages the cost of short-term and long-term shares separately.

Shares are separated according to how long they have been held -- short-term (12 months or less) or long-term (more than 12 months). The cost is averaged for each category separately. Shareholders must notify us at the time of sale whether they are selling short-term or long-term shares. To use this method, shareholders are required to provide the IRS with written confirmation of the categorization from the broker/dealer or investment company.

Specific Share Identification

Allows an investor to specify which shares are being sold.

This method gives investors the most control over their tax liabilities but can require the most planning and record keeping. Investors are required to provide instructions at the time of sale that specify.

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