You Don't Have to Agree With 'Experts'
But on mutual fund inheritance, be sure tax math is right
BOSTON — Q I don't always agree with the authorities cited in financial articles. They all seem to interpret things differently. Am I just being picky?
- T.F., New York
ANot at all. Put three economists or financial advisers together in a small room and you could have a conference - or a riot. If you need to resolve a financial problem, find an adviser whose outlook is compatible with your own. Often it makes sense to talk to a specialist, such as an estate planner, says Maria Crawford Scott, editor of the American Association of Individual Investors Journal in Chicago. If the issue is a general one, or if you don't know what kind of specialist to call, start with a financial planner, she says.
Q From 1992 to 1997 I invested $20,000 in the Evergreen Income & Growth Fund. On May 2, 1994, I inherited my brother's holding, $14,019, in the fund. Dividends were reinvested and taxed each year. Now that I have sold this investment for $46,415, how should I figure my cost basis? Total amount reinvested was $9,396.28.
- K.F., Toms River, N.J.
A According to Tim Schlindwein, a mutual fund expert and head of Schlindwein Associates in Chicago, your cost basis would be the total of your original $20,000, plus the $14,019 inherited from your brother, plus the $9,369.28. He says you're right to focus on the "stepped-up" basis: the $14,019 value of the holdings when you took possession on the date of his death. Also, any transactions during the summer of 1997 might be affected by recent changes in the capital-gains tax. To get information on your transactions, or how to average out purchase costs, call Evergreen Keystone at 800-343-2898.
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