That list includes capital gains distributions
and payouts that are really interest income.
Income and capital gains distributions
account for most taxable events.
During rising markets, these funds can make capital gains distributions
that are taxable to the funds shareholders.
Any interest, dividend or capital gains distributions
of assets held in taxable accounts are taxed, whether they're spent or reinvested.
The board of directors of Swiss Helvetia Fund Inc (NYSE:SWZ) approved a total distribution of USD0.206 per share that comprises short-term capital gains distributions
of USD0.021 and long-term capital gains of USD0.185 per share.
With the duration of the bull market, capital gains distributions
are growing in many mutual funds.
EXCHANGE-TRADED funds are often regarded as more tax efficient than traditional mutual funds largely due to the fact that many ETFs have avoided the annual capital gains distributions
that often frustrate investors in traditional mutual funds.
As a result of the tax treatment of the in-kind transfer process utilized in the creation of ETF units, many ETFs rarely make capital gains distributions
. Investors may therefore exercise much more control over the realization of taxable capital gains when holding ETFs than with traditional mutual funds.
Interest distributions and realized short-term capital gains distributions
are generally taxed at ordinary income rates.
REIT capital gains eligible for the reduced rate are capital gains on the sale of REIT stock and REIT capital gains distributions
. When the provision expires, capital gains rates will revert to 20 percent.
However, ETFs can and do make capital gains distributions
. These usually result when the ETF must buy and sell stocks to adjust for changes in its underlying benchmark (the index the ETF tracks).