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Look at box 2a of your 1099-DIV. Mutual funds pass on capital gains to the holders of their funds.
You will find capital gains reported in box 2a of IRS from 1099-DIV.
These gains are reported on line 13 of IRS Schedule D.
This IRS FAQ explains:
A mutual fund is a regulated investment company that pools funds of investors allowing them to take advantage of a diversity of investments and professional asset management.
You own shares in the mutual fund but the fund owns capital assets, such as shares of stock, corporate bonds, government obligations, etc. One of the ways the fund makes money for you is to sell these assets at a gain.
If the mutual fund held the capital asset for more than one year, the nature of the income from a sale of the capital asset is capital gain, and the mutual fund passes it on to you as a capital gain distribution.
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