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I realize reinvested distributions are additive. That isn't what I asked. What isn't clear is this: In each year from 1995 through 1998, I paid for capital gains on annual distributions of $500. Then in 1999 I sold my mutual fund entirely for $100,000 and had a basis of $60,000. I owe capital gains taxes on $40,000. What is the IRS accounting for reducing the tax on $40,000 with the $500 capital gain I had paid in each year I had held the fund i.e. from 1995 to 1998?

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