GLOSSARY · INVESTING

Capital gains distribution

A payment a fund makes to its shareholders from net gains it realised by selling holdings during the year. In a taxable account the shareholder owes tax on it for that year even if the money is reinvested and even if they bought the fund shortly before the payout. Distributions reported as capital gain distributions are taxed as long-term gains regardless of how long the shareholder held the fund.

Also called: fund distribution, capital gain distribution, year-end distribution
COMPUTE IT WITH YOUR NUMBERS
Asset location →Which assets belong in taxable, pre-tax and Roth?0% capital gains harvesting →How much tax if I sell, and how much gain can I realize at 0%?
LEARN IT PROPERLY
CHAPTER · STOCKS & BONDS MASTERY · STRATEGIESMutual Funds and ETFs: Same Holdings, Different Wrappers
RELATED TERMS
Exchange-traded fund (ETF)Rebalancing
SOURCES
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