Undistributed Capital Gains
Some mutual funds and REITs keep their long-term gains and pay
tax on them, rather than distributing them to shareholders. If you've
invested in one of these, you'll receive an IRS Form 2439, Notice
to Shareholder of Undistributed Long-Term Capital Gains. Attach
Copy B to your Form 1040.
Your undistributed capital gains
will appear in Box 1a of the Form 2439, and it will be reported on
Line 11 of Schedule D. You can claim a tax credit for the amount
of tax paid by the fund or REIT on Line 73 of your Form 1040. Just
check Box "a" indicating that the payment was shown on Form 2439.
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Save Money You should also keep a copy of Form
2439, Notice to Shareholder of Undistributed Long-Term Capital
Gains in your records, so that when you sell the investment, you
can increase its tax basis by the difference between the gain you
reported over the years, and the tax credit you claimed. If you do,
it will reduce the amount of capital gains you report for the sale. |
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