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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 124982  
Subject: Re: another mutual fund question Date: 4/8/1998 10:40 AM
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[[Q. If i hold shares in a fund without adding any more cash for over 18 months, then sell it, i will be
taxed at the long term rate.]]

Only if your dividends are not reinvested.

[[ Then I realized that during this time, reinvested diividends and cap gains
are being reinvested (but I think only put in at the end of the years) SO....then some of my money
will be taxed at Short term or intermidiate rates if i sell all at I correct about

Absolutely correct. When dividends are reinvested, you are actually buying additional shares of the fund at new prices and with new holding periods. The only way around this would be to elect to be PAID the dividends, rather than reinvesting them.

TMF Taxes
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