Capital Gain Distributions

Capital Gains Distribution

An amount of money paid to shareholders of a mutual fund from its capital gains over the course of a year. That is, a mutual fund takes its capital gains over a year and divides them among shareholders, who are then responsible for capital gains taxes. Capital gains distributions are usually made at the end of each calendar year and they reduce the fund's net asset value. Because of the existence of capital gains distributions, some analysts advise against purchasing mutual funds at the end of a calendar year because a shareholder will become instantly liable for capital gains taxes.

Capital Gain Distributions

Amounts paid by mutual funds, regulated investment companies, and real estate investment trusts that represent the shareholder's portion of gain from the sale of capital assets owned by these investment companies. Capital gain distributions are taxed in the year constructively received and are always considered to be held long term.
References in periodicals archive ?
M2 EQUITYBITES-December 4, 2018-John Hancock Premium Dividend Fund And Tax-Advantaged Dividend Income Fund announces distributions and capital gain distributions
Global Banking News-December 4, 2018-John Hancock Premium Dividend Fund And Tax-Advantaged Dividend Income Fund announces distributions and capital gain distributions
In the last decade or so, more focus has been paid to these portfolios, which attempt to minimize annual capital gain distributions. The more tax-efficient your investments are, the potentially lower income taxes you will pay.
In both tax years, capital gain distributions from mutual funds were third highest in terms of percentage of total net gains less losses.
Manage increasing mutual fund capital gain distributions
First, the option permitting parents to include the income on their own returns has limitations that must be identified: The child's investment income can consist of only interest, dividends, and certain capital gain distributions, and it cannot exceed a certain limit that changes from time to time.
Trusts with capital losses must consider this rule when planning capital gain distributions.
The investment policy and strategy reinvests all capital gain distributions and profits.
Capital gain distributions by open-end mutual funds accelerate the capital gains tax liability of their taxable investors, thereby reducing their after-tax return.
A greater estimated percentage of taxpayers misreported gains or losses from securities sales (36 percent) than capital gain distributions from mutual funds (13 percent).
Capital gain distributions result from the profitable sale of securities in the fund and frequent selling within a fund makes the fund more likely to produce taxable distributions than a fund that follows a strategy of "buy and hold."
Long-term capital gain distributions were taxed at 20%.