Year end mutual fund purchases

Description

Abstract: Many taxpayers make adjustments to their investment portfolio near year end to take profits, to recognize tax losses, to reallocate their assets, and for various other reasons. When making purchases of mutual funds near year end, however, it’s important to be wary of actually purchasing a tax liability. This article explains why the timing of a share purchase in a particular fund can affect one’s tax liability. To avoid this, it’s advisable to check with the mutual fund company to determine the status and nature of any forthcoming dividends when purchasing equity mutual funds late in the year.