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The Basics |
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Taxable Events You May Be Able To Control
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Short-Term Capital Gains Tax
You may be subject
to short-term
capital gains
if you profit
from the sale
of fund shares
that you have
held for less
than 12 months.
Short-term capital
gains are taxed
at ordinary federal
income tax rates,
which can be
as high as 35%.
That's why, from
a tax perspective,
it may generally
be a good idea
to take a long-term
approach and
avoid selling
fund shares that
trigger short-term
capital gains.
A possible exception
is if you're
using a strategy
called "tax loss selling."
Long-Term Capital Gains Tax
You
may be subject
to long-term
capital gains
if you profit
from the sale
of fund shares
that you have
held for 12 months
or longer. The
2003 Tax Relief
Act created the
new maximum long-term
rate of 15%.
And those in
the 10% or 15%
bracket will
pay only 5% on
long-term gains,
and 0% in 2008,
but only for
that one year.
Obviously, both
of the maximum
long-term capital
gains rates are
significantly
lower than the
maximum rate
for short-term
gains, but remember
that you won't
trigger a short-
or long-term
capital gain
on your fund
shares if you
don't sell them.
Next:
Taxable
Events You May Not Be Able To Control
This information is general in nature and is not intended to constitute tax advice. Always consult your tax advisor for more detailed information on tax issues and advice on your specific situation.
Investors should consider the investment objectives, risks, charges, and expenses of a fund carefully before investing. Download a prospectus that contains this and other information about a fund, and read it carefully before investing.
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