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Okey dokey. I'm a little bit clueless when it comes to tax issues, so if this question makes no sense... remember I've warned you.

Up until about three months ago, my "portfolio" consisted of two mutual funds. That's it. In October, I unFoolishly purchased an IPO (Del Monte Fresh Produce - uh, whatever, let's not go there). I purchased the stock at $16, liquidating part of one of my funds and wire transfering it to a Dean Wit-less broker to do so...

My question is two-fold:

1) Do I pay a capital gain on the sale of the mutual fund shares even though they went directly towards the puchase of the stock?

2) I plan on selling the stock and the rest of the fund I used for the purchase to set up a Foolish Four port. I will take a loss on the stock of about $200. How does this work tax-wise? Is there a good time to sell the stock for tax purposes?

We're not talking about a lot of money here... my portfolio amounts to about $6000 dollars and my dividends and capital gains from my funds has been so negligible until now that it hasn't made a dent on my tax return. Things are getting more and more complicated and I'd love some advice/counsel on this stuff...

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