Undistributed Capital Gains -Form 2439
A mutual fund usually distributes all its capital gains to its shareholders. The mutual fund company reports these gains on Form 1099-DIV. However, a mutual fund might keep some of its capital gains and pay a tax on them. When this happens, the mutual fund company will send you a Form 2439: Notice to Shareholders of Undistributed Long-Term Capital Gains.
Report these capital gains even though you don’t actually receive them. However, since the mutual fund paid tax on the gains, you can claim a credit for the taxes they pay.
You also need to increase the basis of your mutual fund shares by the difference between these two items:
- Amount of undistributed capital gains you report
- Amount of taxes reported to you as paid
Learn more about Form 8690 and the IRS net investment income tax from the tax experts at H&R Block.
As end-of-year approaches, taxes owed can become a major headache. Plan ahead by considering 529 Tax Deductions and other end-of-year savings options.
Learn more about section 1202 gains from small business stocks and get tax answers at H&R Block.
Learn more about investment property tax with advice from the tax experts at H&R Block.