Course 507: Calculating Your Cost Basis
Single-Category Averaging
In this course
1 Introduction
2 First In, First Out (FIFO)
3 Specific Share Identification
4 Single-Category Averaging
5 Double-Category Averaging
6 What's the Difference?

Another method for mutual fund investors is single-category averaging. Divide the total cost you paid for your shares by the total number of shares you own and voila, you have your average-cost basis for each share. Single-category averaging is quite popular with investors because it doesn't take much energy to calculate. But once you begin using it to compute cost basis, the IRS prohibits switching to another method without prior approval.

Next: Double-Category Averaging >>


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