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

Related Topics

Related Resources

7 Ways to Generate Passive Income

Earn extra income by setting up a plan that will earn money as time goes on – even when you are not physically working. Learn more at H&R Block.

Cash in Lieu of Fractional Shares

Learn more about the definition of cash in lieu on your 1099-B and get tax answers at H&R Block.

Taxes on Alimony and Child Support

Learn about the tax implications of alimony payments and child support from the tax experts at H&R Block.

Education Savings Accounts

What are education savings accounts, and how do they affect your taxes? Discover more about ESAs and get tax answers at H&R Block.