I have had an "addition to basis" (as Schwab calls it) in 2020 for Vanguard VWO (ETF of VEMAX) and in 2023 for iShares EFAV (an ETF). The VWO shares were purchased in 2019, and the EFAV was purchased in 2013, 2021, and 2022. The cost basis of none of the shares has been changed. (In contrast to funds with a "return of capital", where the cost basis is reduced.)Request for help. For those who were NOT reinvesting distributions, and only have covered share lots---began investing after 1 Jan 2012, required tracking of mutual fund began---could you please check your first lot (Vanguard's FIFO cost accounting) to see if its cost basis has been increased by Vanguard's reported amount. If you find this to be true, then please tell us as it indicates how those of us with uncovered tax lots can handle this problem---which lot gets the increased cost basis.*
In regards to why the reported number is negative: My spreadsheet calculates/verifies the 1099 values. The formula for 1099-DIV box 1a (Total Dividends) is the sum of:
Distributions (i.e. deposits into your account)
Short Term Gain Distributions (those that were labeled as such when they happened, and not recategorized on the 1099)
- Foreign Tax Paid
- Addition to Basis
- Long Term Gain Distributions (only those distributions that were recategorized on the 1099)
- Return of Capital (box 3)
Of those, the foreign tax and the addition are negative values, thus summing the negative of them increases the magnitude in box 1a.
As I've written in other replies, my belief is that the "increase to basis / addition to basis" is not referring to cost basis.
Statistics: Posted by boomer_techie — Sun Mar 24, 2024 11:58 pm — Replies 35 — Views 5154