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    Mutual Fund - Capital Gains Calculator: An Illustration

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    prabs20069178
    This document provides examples of calculating capital gains from mutual fund transactions according to the First In First Out (FIFO) method. Case 1 shows a single purchase and redemption transaction resulting in a short-term capital gain. Case 2 involves using multiple purchase transactions to fulfill a redemption, resulting in both long-term and short-term gains. Case 3 is similar to Case 2 but results in both short-term loss and long-term gain from the redemption being fulfilled by purchases over different periods of time.

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    Mutual Fund - Capital Gains Calculator: An Illustration

    Uploaded by

    prabs20069178
    81 views2 pages
    This document provides examples of calculating capital gains from mutual fund transactions according to the First In First Out (FIFO) method. Case 1 shows a single purchase and redemption transaction resulting in a short-term capital gain. Case 2 involves using multiple purchase transactions to fulfill a redemption, resulting in both long-term and short-term gains. Case 3 is similar to Case 2 but results in both short-term loss and long-term gain from the redemption being fulfilled by purchases over different periods of time.

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    This document provides examples of calculating capital gains from mutual fund transactions according to the First In First Out (FIFO) method. Case 1 shows a single purchase and redemption transaction resulting in a short-term capital gain. Case 2 involves using multiple purchase transactions to fulfill a redemption, resulting in both long-term and short-term gains. Case 3 is similar to Case 2 but results in both short-term loss and long-term gain from the redemption being fulfilled by purchases over different periods of time.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    81 views2 pages

    Mutual Fund - Capital Gains Calculator: An Illustration

    Uploaded by

    prabs20069178
    This document provides examples of calculating capital gains from mutual fund transactions according to the First In First Out (FIFO) method. Case 1 shows a single purchase and redemption transaction resulting in a short-term capital gain. Case 2 involves using multiple purchase transactions to fulfill a redemption, resulting in both long-term and short-term gains. Case 3 is similar to Case 2 but results in both short-term loss and long-term gain from the redemption being fulfilled by purchases over different periods of time.

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    Mutual Fund - Capital Gains calculator : An illustration

    Index

    Units (Original) Original Buy / Sell transaction units


    Matched Quantity Sell transaction units matched with respective Purchase units, in accordance with the FIFO logic
    Purchase = Buy Includes the following transaction types : (P) Purchase, (DR) Dividend Reinvestment, (TI) Transfer In, (SI) Switch In
    Redeemed = Sell Includes the following transaction types : (R) Redemption, (TO) Transfer Out, (SO) Switch Out

    Case 1: Single Transaction of Buy and Sell

    Purchase Redemption Short Long


    Sub- Scheme
    Sr. No. Category AMC Matched Tx Tx term term
    category Name NAV Date NAV Value NAV Date NAV Value
    Quantity Type Type Gain Gain
    Gain
    ICICI
    according ICICI
    PRUDENTIAL
    to FIFO Medium PRUDENTIAL
    1 DEBT INCOME 100 P 8/25/2006 35 3500 R 10/30/2006 45 4500 1000 0
    Term MUTUAL
    PLAN-
    FUND
    GROWTH

    Units Tx
    NAV Date NAV Value
    (Original) Type
    Original Sell transaction 100 R 10/30/2006 45 4500
    Original Buy transaction 250 P 8/25/2006 35 8750

    o 100 units were sold on Oct 30, 2006 @ 45/unit (NAV)

    o Original Buy transaction for the corresponding Sell transaction :

    250 units were bought on Aug 25, 2006 @ 35/unit (NAV)


    Out of 250, only 100 units were used for calculating gain according to FIFO logic
    Gain = 100 * (45 - 35) = 1000
    Difference between Oct 30, 2006 and Aug 25, 2006 is <= 365 days, hence Short term Gain

    o Total Gain = 1000 (Short Term)

    Case 2: Single Sell transaction using multiple Buy transactions

    Purchase Redemption
    Short Long
    Sr. No. Sub- Scheme Matched Tx Tx term term
    Category category AMC Name Quantity Type NAV Date NAV Value Type NAV Date NAV Value Gain Gain

    ICICI
    ICICI
    PRUDENTIAL
    Medium PRUDENTIAL
    Gain 2 DEBT INCOME 150 P 8/25/2006 35 5250 R 9/22/2009 55 8250 0 3000
    Term MUTUAL
    according PLAN-
    FUND
    to FIFO GROWTH

    ICICI
    ICICI
    PRUDENTIAL
    Medium PRUDENTIAL
    3 DEBT INCOME 50 DR 9/22/2007 0 0 R 9/22/2009 55 2750 0 2750
    Term MUTUAL
    PLAN-
    FUND
    GROWTH

    Units Tx
    NAV Date NAV Value
    (Original) Type
    Original Sell transaction 200 R 9/22/2009 55 11000
    Original Buy transaction 1 250 P 8/25/2006 35 8750
    Original Buy transaction 2 150 DR 9/22/2007 0 0

    o 200 units were sold on Sep 22, 2009 @ 55/unit (NAV)

    o Original Buy transaction for the corresponding sell transaction :

    a) 250 units were bought on August 25,2006 @ 35/unit (NAV)

    Out of 250, only 150 (250 - 100) units were used from this, since 100 units have already been used in the first Sell transaction
    Gain = 150 * (55-35) = 3000
    Difference between Sep 22, 2009 and Aug 25, 2006 is > 365 days, hence Long term Gain

    b) 150 units were bought (DR) on Sep 22, 2007 @ 0/unit (NAV)

    Out of 150, only 50 (200 - 150) units were used from this purchase transaction
    Gain = 50 * (55 - 0) = 2750
    Difference between Sep 22, 2009 and Sep 22, 2007 is > 365 days, hence Long term Gain

    o Total Gain = 3000 + 2750 = 5750 (Long Term)


    Case 3: Single Sell transaction using multiple Buy transactions, resulting in Short term as well as Long term Gains

    Purchase Redemption Short Long


    Sr. No. Category Sub- Scheme Matched Tx Tx term term
    NAV Date NAV Value NAV Date NAV Value
    category AMC Name Quantity Type Type Gain Gain

    ICICI
    ICICI
    PRUDENTIAL
    Medium PRUDENTIAL
    4 DEBT INCOME 100 DR 9/22/2007 0 0 R 9/30/2009 31 3100 0 3100
    Gain Term MUTUAL
    PLAN-
    according FUND
    GROWTH
    to FIFO

    ICICI
    ICICI
    PRUDENTIAL
    Medium PRUDENTIAL
    5 DEBT INCOME 200 TI 10/30/2008 33 6600 R 9/30/2009 31 6200 -400 0
    Term MUTUAL
    PLAN-
    FUND
    GROWTH

    Units Tx
    NAV Date NAV Value
    (Original) Type
    Original Sell transaction 300 R 9/30/2009 31 9300
    Original Buy transaction 1 150 DR 9/22/2007 0 0
    Original Buy transaction 2 350 TI 10/30/2008 33 11550

    o 300 units were sold on Sep 30, 2009 @ 31/unit (NAV)

    o Original Buy transaction for the corresponding sell transaction :

    a) 150 units were bought (DR) on Sep 22, 2007 @ 0/unit (NAV)

    Out of 150, only 100 (150 - 50) units were used from this purchase transaction
    Gain = 100 * (31 - 0) = 3100
    Difference between Sep 30, 2009 and Sep 22, 2007 is > 365 days, hence Long term Gain

    b) 350 units were bought on Oct 30, 2008 @ 33/unit (NAV)

    Out of 350, only 200 (300 - 100) units were used from this purchase transaction
    Gain = 200 * (31 - 33) = - 400
    Difference between Sept 30, 2009 and Oct 30, 2008 is <= 365 days, hence Short term Gain

    o Total Gain = 3100 (Long Term) and - 400 (Short Term)

    * Special Case where the resulting Gain is split into Short term and Long term Gain

    -end

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