FOR such a conceptually simple way to invest — people pooling their assets for professionals to manage — mutual funds pose a remarkably complex set of issues for taxpayers.

The mechanical ease with which many investors buy fund shares may be lulling them into thinking that the tax implications are minimal or can be easily dealt with at some distant date. Two-thirds of those shares are now held in tax-favored retirement accounts or annuities.

Many people may even believe that swapping one fund for another within a fund family has no tax consequences. But, of course, such a swap outside an individual retirement account or 401(k) is actually a sale and purchase for tax purposes, though commissions are generally waived.

Most clients we work with are unaware of the taxable consequences of making exchanges, said J. Patrick Collins Jr. president of a firm bearing his name in Towson, Md.

And there are still investors who, despite widespread publicity every year, have not learned to avoid buying fund shares just before distributions are made, a mistake that results in a tax levy on phantom gains. Conversely, sales that are to be minimally taxed should precede this date, which for most funds occurs in the last several weeks of the year.

According to a score of responses by members of the National Association of Personal Financial Advisors, there are legions of investors who know these basics but are largely innocent of other important elements of tax law governing mutual funds.

For example, long-term investors who plow back dividends and capital gains distributions into their mutual funds, most often automatically, commonly fail to include these in the cost basis of shares to avoid overpaying taxes when shares are eventually sold.

The yearly taxation on mutual funds is maddeningly difficult to manage if dividends are reinvested, said Steven Podnos, the proprietor of Wealth Care in Merritt Island, Fla. Even a meticulous record-keeper will have trouble figuring the cost of holdings that include perhaps dozens of lots of shares reinvested over a financial lifetime.

The solution recommended by Mr. Podnos and others is to violate conventional investment advice and to take dividends in cash. That, he said, will keep the basis as original for later capital gains calculations. While this does not directly affect the amount of tax due, it sharply reduces paperwork and makes errors on the eventual sale of shares less likely.

There are many other considerations. The law offers choices for figuring the cost basis of holdings, a process that can become especially complex for investors who both reinvest dividends and capital gains and periodically sell off some of their fund shares.

One option is to use the average cost of your shares — a method that can be used for mutual fund sales but not for those of individual stocks. Another is to designate specific lots of shares to be sold, usually those that cost the most. A third option, the default if you don’t choose one of the others, is FIFO, for first in first out, which assumes that the first shares bought are the ones sold. A fourth choice is a refinement of the average cost method, in which a distinction is drawn between long-term and short-term holdings.

Average cost is the most commonly used method, and most fund groups now routinely calculate and provide this figure for you. If you are looking to minimize the tax hit of a sale, however, the best method is the most flexible one: the designation of specific shares.

Keeping track of specific lots of shares, of course, requires assiduous bookkeeping. You need not only a lifetime of purchase records, including reinvestments of dividends and capital gains, but also documentation of instructions for fund sales.

Unless you want to go through all that, advised Sam Beardsley, director of investment taxation at the T. Rowe Price Group in Baltimore, most people would select average cost. And the hiring of an accountant to help you use specific identification, he added, would probably cost more than the tax savings.

Keep in mind that once you choose any of these methods, you must stick with it year after year.