Sunday, October 5, 2008


Since I will not be “wandering” the net for at least a week, and therefore will not be posting a BUZZ entry next Saturday, I wanted to provide you with a few additional BUZZ items that I came across after publishing yesterday’s entry.

* Market Watch reports that “Mutual fund investors, facing large losses due to the market downturn, may also be hit this year with a high tax bill as redemptions create capital gains for their funds” in its article “Fund Outflows Mean Tax Hit For Investors”.

As spooked investors pull their cash from stock funds -- more than $110 billion so far this year, according to TrimTabs Investment Research -- managers are forced to sell assets to pay them out. Often, the quickest way to raise cash is by selling high-valued stock, which creates capital gains liabilities for the fund that investors must pay at year's end.”

When a mutual fund sells any of its investments at a profit this gain is passed along to the fund’s shareholders, usually at year end, as a “capital gain distribution”. This distribution is taxed as a long-term capital gain at the lower capital gain rates.

This may not be too bad – these gains may be offset by other stock market and mutual fund losses for the year. And, as they are taxed at the special lower rate some of the distribution may be taxed at the 0% rate – which means “0” tax.

* TAX PROF Paul Caron provides links to the Republican Vice Presidential candidates 2006 and 2007 returns in his post “Gov. Palin Releases Tax Returns and Financial Disclosure Forms”. The post also includes updated info on the issue of her per diem reimbursements.

* Make sure to go to DON’T MESS WITH TAXES on Monday. Kay should have the monthly Tax Carnival up by midday, and I do believe I am included. And be sure to check out the first in a series of guest posts on MY BEST TAX ADVICE here at THE WANDERING TAX PRO.