@RAVINDRATURAGA ,
(a) is this a real situation or hypothetical/class question?
(b) are you US person ( citizen / GreenCard / Resident for Tax purposes ) or NRA ?
(c) If you are invested in Foreign Mutual Fund, which country, is it through a US broker / entity or a foreign broker, are the Mutual Fund shares traded on the US market also or just in foreign country ?
I ask all this because the rules of recognition of realized and unrealized gain is significantly dependent on whether the Mutual Fund is "regulated" or not per US Treasury view. At worst foreign mutual fund could be regarded as PFIC ( Passive Foreign Investment Company ) and subject to such harsh regs,
So please tell more about the situation --yes ?
