Tax Questions

What are capital gain distributions?

What are capital gain distributions?

Capital gain distributions are also called capital gain dividends are not capital gains as referred to when a capital asset is sold for profit. Capital gain distributions are paid by mutual funds or real estate investment trusts or REITs to mutual fund or REIT owners and credited to their investment accounts.

IRS reporting mutual fund capital gain distributions

The capital gain distributions are reported in box 2a of Form 1099 DIV that the mutual fund company or REIT company sends out to their shareholders. Capital gain distributions are something that most mutual fund owners or REIT owners have to deal with at the end of the year.

What are capital gain distributions

Undistributed capital gains of mutual funds or REITs

If the capital gains from mutual funds or REITs are distributed, they are reported on the form 1099-DIV. However, if the capital gains are not distributed (long term capital gains) then you must treat your share of these capital gains as distributions even if you did not actually receive them. Undistributed capital gains are reported on Form 2439, Notice to Shareholder of Undistributed Long Term Capital Gains.