Vermont Capital Gains Exclusion Question

[DAG8]

Are capital gains from index funds or mutual funds eligible for the 40% exclusion option (Ref form IN-153)?

[ShirlynW]

It depends. Vermont Reg. 1.5811(21)(B)(ii) Capital Gains Exclusion states, " the sale of stock of closely held corporation that is not publicly traded qualifies for the 40% exclusion." If the indexed or mutual funds consist of stock that are closely held by a corporation  and is not publicly traded, it qualifies for the 40% exclusion.

It is not likely that your mutual fund holds these kinds of stocks unless it is a highly specialized fund.  

[DAG8]

Thank you for the detailed response.   That answered my question.