Q – I have incurred over $20,000 in capital gains over because mutual funds I own sold shares within the portfolio. Also, some how I have also incurred about $5,000 in capital gains dividends (which I have not even heard of before).
My question is: How can I avoid these taxes next year? The value of these same funds has depreciated even though all the funds are worth less than I paid for them and are back-end loaded. I am having to cash in investments to pay the taxes. – J.W.
A – Mutual funds normally make annual distributions in December and these are taxable when received outside a registered plan. This is especially annoying when the unit value of the fund has declined as in this case.