It's possible. say a fund holds stock X and its market value increase from say $10/share to $20/share but the fund does not sell the stock. then there should be no gain for the mutual fund shareholders. if the stock is sold at a gain even if the fund does not distribute the proceeds the shareholders would have income. however, there are situations where there may be special treatment. for example, if a fund sells shares at a loss, that loss can't be passed out to the shareholders but may offset gains on sales. earnings on what the fund holds such as dividends and interest would be taxable to the shareholders even if not distributed. if there is taxable income to the shareholders then the fund would issue 1099s, 1098-Bs or possibly form 2439. specific questions need to be addressed to the fund.
@OLD-GAL = the simple asnwer is 'no'.
"unrealized gains' which is what I think you are trying to describe are not taxable
you are liable for tax on income from the mutual fund if
a) you sell the shares
b) the mututal fund distributes income (even if you reinvest the income)
c) the mutual fund declares a capital gains distribution (even if you reinvest the distribution)
you didn't state it, but if this mutual fund is held by an IRA or 401(k), there is no tax even if a), b) or c) occur. The tax would only be an issue if you distributed money from the IRA or 401(k).
Mutual funds that earn dividends and cap gains from the stocks they own will pass that income thru to the shareholders even if no funds are distributed. So if you are issued a 1099-DIV you must report those on your personal tax return.
Now what the other answers alluded to was the buying & selling that the mutual funds do inside the fund ... those are not reported on your personal tax return "directly". The mutual fund nets the gains and losses that happen during the year and if there is an overall gain that is put on the 1099-DIV box 2a. If there is an overall loss it is retained by the fund for use in the future.
Then, when you sell your shares in the mutual fund, you may have a gain or loss from that sale which you also need to report on your return ... it will be on a 1099-B from the broker.
If you are asking about reinvested dividends. Dividends are taxable. You will get a 1099 Div for those.
A reinvested dividend is taxable. It is really 2 transactions, you got a Dividend then you bought more shares. Just like if they sent you a check and then you bought more shares. So be sure to add it to your cost basis when you sell the shares.
Unless it is in some kind of retirement account like a 401K or IRA. Then you should not get a 1099Div for it and it is not reported or taxable.
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