Sale of Mututal Funds

From: "Peter Diamond" <diamond@vsi.net>
Subject: Sale of Mututal Funds
Date: Sun, 19 Dec 1999 10:17:10 -0500

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Juan,
You did the right thing.  If you sold right after the distribution, you
would have received the same amount of money since you would just be selling
more shares at a lower price.
The big difference is that now all of your gain is a long term capital gain
taxed at 20%.  If you sold after the distribution, your monetary gain would
be the same, but some of it would become a short term gain taxed at your
ordinary tax rate.
This situation is the inverse of "don't buy the dividend".  You don't want
to buy a fund right before the distribution because you will not get any
monetary gain, but you will get a tax bill for something you only owned for
a few days.

Peter



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