Question

5 years ago, an individual had invested $10,000 in an Investment Trust. Over those years, the trust has distributed $2,000, consisting of $1,600 of dividends and $400 of capital gains. The investor has reinvested these distributions in additional trust units. The investor's aggregate current cost basis in the Trust is:

Answer 1

Answer: $12,000

Step-by-step explanation:

From the question, we are informed that years ago, an individual had invested $10,000 in an Investment Trust and that over those years, the trust has distributed $2,000, consisting of $1,600 of dividends and $400 of capital gains and also that the investor has reinvested these distributions in additional trust units.

The investor's aggregate current cost basis in the Trust will be the beginning basis which was $10,000 added to the $2000 that was distributed. This will be $12,000.