Hi,
I suspect I am not understanding the mechanics of mutual funds.
I have a mutual fund account with Primerica. As I understand from reading Investopia,
"
Mutual funds distribute income to shareholders through capital gains distributions or dividend distributions. Interest earned by a fund's assets is paid as a dividend distribution.
To avoid paying taxes on earnings, mutual funds are required to pass on all net income to shareholders at least once each year. "
So I understand that the 1099 DIV shows my taxable earnings. But I can't understand why I get a 1099 B when I redeem the mutual fund to get cash. I mean the 1099 B is basically a cost basis, dealing with earnings or loss, right? But if there are earnings, they are reported as dividends in the 1099 DIV, and I am paying taxes on those earnings.
Why does that seem like double taxation to me?
Can someone set me straight?
thanks!
