1099 Capital Gains

[rdsrhodes]

My 1099 form shows a capital gain of $41,000, which is added to my taxable income, but I never receive the funds.  They are reinvested to purchase other funds/stock.  Why would I pay taxes on the capital gains now?  Would I not pay taxes on this when I get a retirement distribution?

[rjs]

You pay tax on the gain because you received the money in your account. It doesn't matter what you do with the money after you receive it. It was your choice to reinvest it.

What does a retirement distribution have to do with it? If the gain was in a tax-sheltered retirement account such as an IRA or 401(k) it would not be reported on a 1099 and you would not pay tax on it. In a regular taxable account you can take the money out anytime you like. You do not have to save it for retirement.