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Subject:  Basic Mutaul Fund/Tax Question Date:  4/10/1998  12:38 PM
Author:  kmaughan Number:  3390 of 127642

I'm embarassed to ask such a seemingly simplistic tax question, but here goes. I am new to investing and have only one mutual fund account with Seligman. After my intial investment, I have $50 per month invested directly into the account. I have never taken any withdrawls out of the fund only these small incremental additions. Well on November 30, something strange happened - for no apparent market reason the listed value of the fund shares dropped from ~ $32 to ~$24 and the newspaper mentioned that "Both 12b-1 and redemption charge in effect". What the heck is going on? But the real tax question is this - What sort of capital gains charges do I have to pay if I didn't sell any shares of the fund? Seligman sent me a form with a dollar figure broken down into two sums, designated as (I don't have the form in front of me) "short term ..." and "long term ... " How do these relate to the schedule D form (1090?) that I have to fill out? I'm obviously confused - I thought that you didn't pay capital gains taxes until you "cashed out"? Help! Any advice would be very appreciated.
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