Your cost basis is vital particularly if you reinvested dividends and capital gains distributions instead of receiving the earnings in cash. Reinvesting distributions increases the cost basis of your investment and must be accounted for so that you may report a lower capital gain and pay less tax. If you don't use the higher cost basis, you might pay taxes twice on the reinvested distributions.

Let’s say you bought 25 FAM Funds shares for $1,000 and reinvested the $100 of dividends distributed the first year. The second year you received $200 in dividends and capital gains distributions which you also reinvested. Since tax law considers these reinvested earnings as paid to you even though you didn't actually take the cash, your adjusted cost basis when the shares are redeemed should be recorded at $1,300 instead of the original purchase price of $1,000. Consequently, if you redeem the shares at $1,500, the taxable gain will only be $200 ($1,500 - $1,300) instead of $500 ($1,500 - $1,000). If you record the lower cost basis of $1,000, you'll pay more taxes than necessary.

Please contact us to determine your cost basis accurately.