Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Let's say I have 100 shares of an actively managed mutual fund (this is hypothetical <g>). Each share is worth $10. Over the course of a year, I do not buy or sell any shares of this fund. There are no dividends, capital gains are not reinvested, and (amzingly) the value of all the fund's holding stay exactly the same (with one exception).

However, the fund sells one of the stocks in it's holdings, and generates $1 per fund share in capital gains. Thus, I get a check for $100, and I obviously have to pay taxes on these.

Now, let's pretend that instead the fund generates $1 in "losses" per fund share through internal turnover. Thus, there are $100 in "capital losses". Is this meaningful in anyway? It doens't really seem like a capital loss in the usual sense, but I don't recall seeing anything about it anywhere.

I do realize that if I personally buy or sell shares in a fund, I get the losses/gains from those. I'm asking about trades that are internal to the mutual funds.


Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.