Capital gains exposure is the value an investment fund has gained or lost, and what that might expose the investor to, tax-wise, when they sell or convert that investment into cash. A positive gains exposure means the fund has gained, and the investor might have to pay capital tax on that gain. A negative gains exposure means the fund has lost money. That loss can get carried forward to offset future positive gains exposure.
Capital gains tax will be assessed on the total gain at the time the asset is sold. Example: Bob invested in Somnolent Spinning Inc. at $7. He promptly went to sleep and woke up 10 years later after a Princess Aurora-like slumber. Now, the stock is at $300. Bob wants to sell, but he lives in a state with high capital gains taxes. So he'd pay 40% tax on the gain of $293 per share. Bob thinks maybe it's better to go back to sleep for awhile.
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Finance: What is Capital Gains Distribut...21 Views
Finance a la shmoop what are capital gains distributions? cap gains app
hap-happy day.. your mutual fund invested a hundred grand in whatever.com it then [Mutual fund appears]
was bought by Google for three hundred grand
three years after you invested at least that was your portion that three hundred
grand well you had a gain of two hundred grand
on your investment and because Google paid cash not stock in acquiring
whatever.com on your books the gain was realized ie turned into cash so then the
mutual fund has to distribute to you that capital gains ie the cash it [Capital gains definition appears]
realized in selling the company to the kindly loving people at Google whose
motto is do only a little bit of evil right so one more time for the people in
the back how does this capital gains distribution thing work well the fund
manager looking out for your mutual fund may sell or buy some of the stocks or [Fund manager appears with stocks and bonds]
bonds in your fund if she sells and makes a profit well then that profit or
the proportionate gains part of it has to be distributed to the fund holder and
that's you and then of course you got to pay taxes
on that distribution if your fund is held in a normal account like it's in a
401k or an IRA you'll pay taxes on it later but not right away and if you own
it personally well you'll pay at that year yeah Uncle Sam always needs to get [Uncle Sam appears]
his cut when there's capital gains distribution if he doesn't he gets angry
and you know you wouldn't like Uncle Sam when he's angry [Uncle Sam turns into Hulk]
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