The Lemon Fool

I hope someone can help me to establish how I determine how much cost should be carried forward into my s 104 pool. Units were sold from my fund to cover charges: Units 15.5725, Cost £23.53, Average Cost £1.511. Within 30 days, I received fund rebates and some units were purchased: Units 23.8885, Cost £34.71, Average Cost £1.453. I have matched the shares sold and purchased within 30 days, 15.5725. I have multiplied the repurchase cost £34.71 by the ratio of 15.5725 / 23.8885, to give an acquisition cost of £22.63. Proceeds £23.53 minus costs £22.63 equals a gain of £0.90. I have then added 8.316 (23.8885-15.5725) units to my s 104 pool. I am getting in a muddle trying to determine how much cost to add to my s 104 pool. Initially I calculated £34.71 minus £23.53 (£12.08) as the amount of cost to add to the s 104 pool but I am unsure as to whether I need to take the £0.90 gain into account and either add or subtract that from the figures?

paulatscafell wrote:Units were sold from my fund to cover charges: Units 15.5725, Cost £23.53, Average Cost £1.511.

When you say "cost" here for the initial sale transaction, do you really mean "proceeds"?

So these units in the initial sale transaction are matched to 15.5725 units of the subsequent purchase within 30 days. Their cost is therefore 15.5725 x £1.453 and the gain is as you indicated. No units are taken from the s104 pool. So the base and hence average cost in the pool stay the same.

This leaves a purchase of 8.316 units at a cost per unit of £1.453. These units are added to the pool and the base cost and hence per unit cost adjusted accordingly.

Any gain or loss on a transaction is not relevant to the base cost in the pool.