Not sure if you can assist me on this.

I have a client who invested 500k (individual account) into an investment company with algorithms that move money in and out of the market based on those algorithms. the account is now worth approx. $535,000.

He wants to transfer out of this kind of invest company and we wanted to make sure of the cost basis at $500,000.  They are stating that due to the trading in the account, the cost basis is around $450,000.

questions:

• how can the cost basis be lower than the original 500k he invested?
• Wouldn’t the 500k be the cost basis no matter what since he did not take any distributions or make any further deposits?

Thank you,

Douglas