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Vanguard - Vanguard's cost basis service

Vanguard's cost basis service

 
 
  
 

Keeping track of your cost basis is an important part of determining your capital gains or losses on sales of shares in taxable (nonretirement) accounts. The IRS requires you to report these gains or losses when you file your federal income tax return. Our free cost basis service can help you with tax reporting for your Vanguard investments.

Vanguard mutual fund clients

For mutual fund clients, we'll calculate gains and losses for your mutual fund holdings.

Currently, when you sell or exchange shares of any Vanguard mutual fund that has a fluctuating share value, Vanguard provides you with the cost basis and gain or loss using the average cost method. This method calculates the average cost per share for each share you own. You may, however, choose to use a different method when reporting your gain or loss to the IRS.

Beginning in January 2012, when you sell or exchange Vanguard mutual fund shares acquired on or after January 1 ("covered shares"), you'll be able to choose from these three cost basis methods:

  • Average cost (AvgCost)
  • First in, first out (FIFO)
  • Specific identification (SpecID)

Note: If you select the average cost method, for tax purposes, you'll have two average cost figures—one for covered shares and one for "noncovered shares" (shares purchased prior to January 1, 2012).

Vanguard Brokerage Services clients

For Vanguard Brokerage clients, we'll automatically adjust your cost basis for corporate actions such as stock splits and mergers.

The default cost basis method for stocks and exchange-traded funds (ETFs) held in a Vanguard Brokerage Services® account is "First in, first out" (FIFO). With this method, the first shares you acquired will be the first ones sold. The default method for FundAccess® (non-Vanguard) mutual funds will be average cost.

When you sell stocks and ETFs through Vanguard Brokerage, you can choose from these two cost basis methods:

  • First in, first out (FIFO)
  • Specific identification (SpecID)

For shares of stock in dividend reinvestment plans (DRIPs) and eligible ETFs, you can also choose the average cost method.


Want to learn more about cost basis?

Because of regulatory changes that take effect with the 2012 tax year, brokers―including investment companies such as Vanguard―will have to start reporting cost basis information to the IRS, as well as to you, for sales of covered mutual fund shares. This reporting will begin in 2013. Previously we reported cost basis information only to you. If you're looking to learn more about these changes, how the available cost basis methods work, and how cost basis will affect your tax preparation, visit our Cost basis resource center.

 
 
 
 

Vanguard ETF Shares are not redeemable with an Applicant Fund other than in Creation Unit aggregations. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market with the assistance of a stockbroker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Vanguard Brokerage Services is a division of Vanguard Marketing Corporation, member FINRA.

 

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