susan bought a mutual fund with a 10,000 lump sum amount 10 yrs ago. during the

Question

susan bought a mutual fund with a 10,000 lump sum amount 10 yrs ago. during the 4 years, 4,000 were reinvested. today the shares are valued at 20,000 including any shares purchased with dividends. If susan sells shares equal to 13,000, which of the following one/ ones are true?

1. the taxable gain can be based on an average cost per share.

2. susan can control which shares to sell, therefore controlling taxable gain

3. to minimize the taxable gain today, susan would sell shares with higher cost basis.

4. susan will not have a gain as long as she sells for less than she invested.

Explanation / Answer

the taxable gain can be based on an average cost per share.

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