Phantom Gain

Phantom Gain

A capital gain on which one owes taxes even if one takes a capital loss in the aggregate. The most common type of phantom gain occurs when a mutual fund sells some of its securities at a gain but its own shares decline in value. Because the fund's shareholders technically owned the securities that were sold for a gain, they must pay taxes on those gains even though they have actually lost money on their investment. A phantom gain should not be confused with a paper gain. See also: Phantom Income.
References in periodicals archive ?
Consequently, with their negative capital accounts increased to zero, the taxpayers recognized a phantom gain for that year.
2000-19, the Company will be required to report an additional phantom gain of approximately $111 million in its second-quarter financial statements.
Green continued, "We emphasize to investors that there is no economic substance behind either the $115 million first-quarter phantom gain or the $111 million phantom gain which we will report for the 2006 second quarter.
Exempting the proceeds for contents while allowing the common pool of funds to be spent on the house and contents ensures that disaster victims are not taxed on phantom gain, and that victims are not penalized for the choices they make as they rebuild and recover from the devastation.
Phantom gains tax has proved to be a major obstacle to lender takeovers of property.
This left no suitable means of protecting against phantom gains tax liability and led to our request for a ruling to validate a new approach for limiting the tax to the true economic gain realized in a transfer of property to a lender (usually, zero).