Tax question about closing a non retirement Mutual Fund account.?

Question

We closed this account because the worth had dropped about $600 since first opening it almost 6 years ago. Do we need to claim this on our income tax since it made no money? If we do have to claim it, could anyone help with the form #? Thanks!

Answer 1

Yes. You are allowed to take up to $3000 capital loss deduction, so your $600 will be deductible. Scedule D is for capital gains and losses.

You didn't need to report gains and losses in prior years because you didn't sell and realize any gains/losses.

Answer 2

The short answer to your question is "Yes. You need to report your gain and loss." However the true answer might be a bit more complicated then you are expecting.

The institution who has the account should have been sending your 1099 for your gains/losses in the past years. The gains and losses should have been reported on the tax return of the year when they occurred not when the account is closed.

You might need to file amended return for previous year(s).

Best wishes.

Answer 3

yes you do have to report this. Your mutual fund company should send you a statement on your proceeds that they send to the irs as well. You can then put in your cost and the proceeds from the form and it will either show a gain or loss in your situation probably a loss. Remember that you can also include brokerage fees to your cost to reduce your gain or increase your loss.

Answer 4

Yes!!! You absolutely need to report this. Why, because it is to your benefit. You take the cost and subtract it from what you sell it for and the loss can be taken on your tax return (Sch D) and reduce your taxes.