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  • Effect on Unrealized CG in Mutual Fund after a LTCG distribution on 109

    From [email protected]@21:1/5 to All on Wed Mar 23 18:55:39 2022
    So one of my MFs kicked out a rather substantial LTCG this year,
    resulting of course in quite a jump in my taxable income. Yes that's
    sort of a good news/bad news event, but my question is "what happens to
    the unrealized gain figure on the remaining amount in the fund ? Does it
    go down because of the payout, or stay the same ?

    Tried wading thru my month-end and year-end statements, but could not
    get a clear picture of what effect the payout had on remaining
    unrealized gains.

    It also just occurred to me, what if any effect on cost basis ?

    Thanks for any guidance.

    --
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  • From ira smilovitz@21:1/5 to [email protected] on Wed Mar 23 22:15:53 2022
    On Wednesday, March 23, 2022 at 6:56:02 PM UTC-4, [email protected] wrote:
    So one of my MFs kicked out a rather substantial LTCG this year,
    resulting of course in quite a jump in my taxable income. Yes that's
    sort of a good news/bad news event, but my question is "what happens to
    the unrealized gain figure on the remaining amount in the fund ? Does it
    go down because of the payout, or stay the same ?

    Tried wading thru my month-end and year-end statements, but could not
    get a clear picture of what effect the payout had on remaining
    unrealized gains.

    It also just occurred to me, what if any effect on cost basis ?

    Thanks for any guidance.

    --

    In a perfect system, any distribution from an investment should lower the market value of that investment by the amount of the distribution.In other words, if you fund distributed $1/share, the NAV of the fund would drop by $1. None of this has any
    impact on your cost basis *unless* the distribution is deemed a return of capital, in which case the distribution wouldn't be currently taxable.

    If you want to see the effect of the large CG distribution, you need to look at the NAV on the day before and the day after the distribution. You should see a significant drop in the value.

    Ira Smilovitz, EA
    Leonia, NJ

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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  • From John Levine@21:1/5 to All on Wed Mar 23 23:26:03 2022
    According to <[email protected], [email protected], [email protected] [email protected]>:
    sort of a good news/bad news event, but my question is "what happens to
    the unrealized gain figure on the remaining amount in the fund ? Does it
    go down because of the payout, or stay the same ?

    Mututal funds distribute capital gains in cash. Depending on how you have your account set up, they might send you a check or they might reinvest it in new shares.

    If you get the cash, the cost basis doesn't change. If you reinvest, you've bought
    new shares so the reinvested amount is added to the basis.

    When they distribute the gain, the NAV of each share of the fund goes down by the
    amount they distributed, so you have the same amount, just some in the fund and some
    in cash (which might then be reinvested in new shares.)

    --
    Regards,
    John Levine, [email protected], Primary Perpetrator of "The Internet for Dummies",
    Please consider the environment before reading this e-mail. https://jl.ly

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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  • From Leo Isenteze@21:1/5 to [email protected] on Fri Mar 25 01:40:40 2022
    On 3/23/2022 6:55 PM, [email protected] wrote:
    So one of my MFs kicked out a rather substantial LTCG this year,
    resulting of course in quite a jump in my taxable income. Yes that's
    sort of a good news/bad news event, but my question is "what happens to
    the unrealized gain figure on the remaining amount in the fund ? Does it
    go down because of the payout, or stay the same ?

    Unrealized gains are unrealized so they remain that way. Realized gains
    are what are paid out to you.

    Unrealized gains become realized gains only when the holdings are sold.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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