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
LEARN IT PROPERLY
CHAPTER · STOCKS & BONDS MASTERY · STRATEGIESMutual Funds and ETFs: Same Holdings, Different WrappersRELATED TERMS
SOURCES
- Publication 550, Investment Income and Expenses. Internal Revenue Service.
- Topic No. 409, Capital gains and losses. Internal Revenue Service.