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Old 09-10-2015, 08:44 PM
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Do I have to pay capital gains tax cashing out mutual funds from prior to 2012?

Question regarding capital gains tax on mutual shares invested prior to 2012. I have 60k from 1987 - 2012 and would like to know how much I can pull out without capital gains tax assesed. Due to the tax law changed in 2012, the majority of the investment was made prior to to 2012 when they werent tracked.

Please advise
Thanks



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Old 09-11-2015, 02:18 PM
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Originally Posted by adassoc View Post
Question regarding capital gains tax on mutual shares invested prior to 2012. I have 60k from 1987 - 2012 and would like to know how much I can pull out without capital gains tax assesed. Due to the tax law changed in 2012, the majority of the investment was made prior to to 2012 when they werent tracked.
For tax years beginning on or after Jan 1, 2003 and before Jan 1, 2011, qualifying dividends paid to individual shareholders from domestic corporations / qualified foreign corporations are taxed at long-term capital gains tax rates. For tax years prior to Jan 1, 2003, stock dividends were taxed at ordinary income tax rates, generally resulting in significantly higher tax liability. I guess this means that if you're in the 10% or 15% tax bracket for ordinary income, then your LTCG rate is 0%, however, if you're in the 25%, 28%, 33%, or 35% tax bracket, then your LTCG rate is 15%. If your tax bracket is 38.6%, then your LTCG rate’s be 20% for 2015.

By law, mutual funds NEED to declare distributions reported on Form 1099-DIV after the end of each calendar year. each year. These distributions represent a profit the fund made when selling securities. The major distribution for most funds comes at the end of each year, when net amounts are calculated. Even in years with negative returns, mutual funds can, and must, pay out distributions. It doesn't matter if the securities that the fund held were doing poorly, all that matters is that the fund sold the security at a profit and must now pay out the profits in the form of a distribution, which is a taxable event for the shareholder.So, aslongasyou hold shares in a taxable account, you are required to pay taxes on mutual fund distributions, whether the distributions are paid out in cash or reinvested in additional shares.



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Old 09-17-2015, 09:45 PM
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Originally Posted by Wnhough View Post
For tax years beginning on or after Jan 1, 2003 and before Jan 1, 2011, qualifying dividends paid to individual shareholders from domestic corporations / qualified foreign corporations are taxed at long-term capital gains tax rates. For tax years prior to Jan 1, 2003, stock dividends were taxed at ordinary income tax rates, generally resulting in significantly higher tax liability. I guess this means that if you're in the 10% or 15% tax bracket for ordinary income, then your LTCG rate is 0%, however, if you're in the 25%, 28%, 33%, or 35% tax bracket, then your LTCG rate is 15%. If your tax bracket is 38.6%, then your LTCG rate’s be 20% for 2015.

By law, mutual funds NEED to declare distributions reported on Form 1099-DIV after the end of each calendar year. each year. These distributions represent a profit the fund made when selling securities. The major distribution for most funds comes at the end of each year, when net amounts are calculated. Even in years with negative returns, mutual funds can, and must, pay out distributions. It doesn't matter if the securities that the fund held were doing poorly, all that matters is that the fund sold the security at a profit and must now pay out the profits in the form of a distribution, which is a taxable event for the shareholder.So, aslongasyou hold shares in a taxable account, you are required to pay taxes on mutual fund distributions, whether the distributions are paid out in cash or reinvested in additional shares.
Thanks WnHough for the reply. I missed a couple important points, let me clarify.
I have 60k invested in Fidelity Franklin Templeton mutual shares dating back from 1987 to current. I have paid capital gains tax every year (1099 sent from Fidelity) based on my tax bracket. The main question is, if I sell off any of the shares, will I have to pay tax again in selling shares?

Prior to 2012 they didn't do or track any cost basis on the cap gains. Not sure if the IRS will want me to pay tax again on any shares I sell.

Hope that clarifies,
Thanks in advance



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Old 09-17-2015, 10:30 PM
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Originally Posted by adassoc View Post
Thanks WnHough for the reply. I missed a couple important points, let me clarify.
I have 60k invested in Fidelity Franklin Templeton mutual shares dating back from 1987 to current. I have paid capital gains tax every year (1099 sent from Fidelity) based on my tax bracket. The main question is, if I sell off any of the shares, will I have to pay tax again in selling shares?

Prior to 2012 they didn't do or track any cost basis on the cap gains. Not sure if the IRS will want me to pay tax again on any shares I sell.

Hope that clarifies,
Thanks in advance

I have 60k invested in Fidelity Franklin Templeton mutual shares dating back from 1987 to current. I have paid capital gains tax every year (1099 sent from Fidelity) based on my tax bracket. The main question is, if I sell off any of the shares, will I have to pay tax again in selling shares?======> Whenever a mutual fund company passes /distributes earnings and other payouts to you, a shareholder, so, you need to report mutual fund transactions on your tax return, as well as pay the appropriate taxes on each type of fund income. In geenral aslongas you hold shares in a taxable MF account, you need to pay taxes on distributions, whether the distributions reported on Form 1099-DIVare paid out in cash or reinvested in additional shares. Also, for any time during the year you sold MF shares , you must report the transaction on your tax return and pay tax on any gains and dividends. As an owner of the MF shares, you need to report and potentially pay taxes on transactions conducted by the fund, that is, whenever the fund sells securities.

Prior to 2012 they didn't do or track any cost basis on the cap gains. Not sure if the IRS will want me to pay tax again on any shares I sell========>>financial intermediaries must report accurate adjusted cost basis information to both investors and the IRS for Mutual fund shares acquired on or after Jan 1, 2012.



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