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Is there any way that a municipal bond based money market mutual fund could separate the long-term capital gains generated by prudent asset management from the remainder of the fund and sell them to investors eager to own capital gains because of their favorable tax treatment? I would like to retain the other income the investment generates, income that is taxed as 'ordinary income."

But the ordinary income is the part that's tax-exempt muni. bond interest. And if it's a money-market-type portfolio, the return is pretty low to begin with.

From my perspective the income tax filing complications I experience because I have to recognize a less-than $100 long-term capital gain end up costing me way more than the value received.

How complicated can it be? Is the problem that what you actually have is a short-term bond fund that you use to write checks on, so that every check generates a 1099-B transaction? If so, then you need to use a real money market fund, that maintains a $1 share price.

Bill
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