A MUTUAL FUND SITUATION THAT INCURS TAXES
Learn even more about this topic with the Encyclopedia of Personal Finance™
Here is a common situation that causes investors to be taxed, often without their realization.
When you shift money from one fund to another, even between funds in the same family, the IRS views it as a sale of your shares followed by a new purchase. You will be taxed on any capital gains made from the transfer. The exception to this is when transfers are made within a qualified retirement plan, such as an individual retirement account.
What would taxes be without paperwork? Next,we will look at the tax forms you'll need.