What Is a Capital Gains Distribution?
How Is It Taxed? Do all capital gain distributions have to be reported on Schedule D? All capital gain distributions from mutual funds must be reported on Schedule D of Form 1040. Do you pay taxes on distributions? Yes, you pay taxes on distributions from a mutual fund. The taxes are based on the capital gains and dividends earned by the fund, and are paid by the shareholders when they redeem their shares. What are the current capital gains tax rates? The current capital gains tax rates are as follows:
-Long-term capital gains tax rate: 20%
-Short-term capital gains tax rate: Your marginal tax rate What is the difference between income distribution and capital gains distribution? Income distribution is the distribution of a fund's income to shareholders. This income is typically generated from the fund's investments in dividends, interest, and other sources. Capital gains distribution is the distribution of a fund's capital gains to shareholders. This is typically generated from the fund's investments when they are sold at a profit. Does a capital gain distribution change cost basis? Yes, a capital gain distribution will change your cost basis. The distribution will increase your cost basis by the amount of the distribution.