capital-gains-distribution

Vocabulary Word

Definition

'Capital gains distribution' is a payment made to investors from profits earned when an investment fund sells its assets. It's a bit like getting a slice of the pie when the fund has more money than it started with.

Examples in Different Contexts

In mutual funds, 'capital gains distribution' refers to profits paid to investors from the sale of securities in the fund. A fund manager might note, 'We're planning a capital gains distribution after reallocating some of our portfolio.'

Practice Scenarios

Finance

Scenario:

Our fund has been extremely successful this year. Soon we will start the process of distributing the profits to the investors.

Response:

Once we finalize the year's financial statement, we can begin the process of capital gains distribution to our investors.

Tax

Scenario:

Remember that even if you reinvest your earnings from your investments, you are still expected to report the money you made.

Response:

I have already reported the capital gains distribution on my tax return by following your advice.