FAQs
For your convenience, We have compiled a list of questions often asked by new clients. If your questions are not answered here or you need further information, then please contact us via e-mail or via phone at 603.382.8867 and we’ll be happy to help you. We look forward to hearing from you soon.
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April 16-December 31
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For Individuals
11. I received a 1099-DIV showing a capital gain. Why do I have to report captial gains from my mutual funds if I never sold any shares?
A mutual fund is a regulated investment company that pools funds of investors allowing them to take advantage of a diversity of investments and professional asset management. You own shares in the fund, but the fund owns assets such as shares of stock, corporate bonds, government obligations, etc. One of the ways the fund makes money for its investors is to sell these assets at a gain. If the asset was held by the mutual fund for more than one year, the nature of the income is captital gain, which gets passed on to you. These are called capital gain distributions, which are distinguished on Form 1099-DIV from income that is from other profits, called ordinary dividends.
Captial gains distributions are taxed as long term captial gains regardless of how long you have owned the shares in the mutual fund. If your capital gains distribution is automatically reinvested, the reinvested amount is the basis of the additional shares you purchased.
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