Taxpayers who own mutual funds recognize their share of capital gains even if no distributions are received.

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Taxpayers who own mutual funds are responsible for recognizing their share of capital gains, even if they don't receive distributions. This is because a mutual fund may sell some of its underlying assets at a profit, triggering a capital gain. The mutual fund will then pass on that gain to the shareholders who own shares in the fund, even if they haven't received a distribution. As a result, shareholders must report and pay taxes on their share of the capital gains when they file their tax returns.

Taxpayers Who Own Mutual Funds Recognize Their Share of Capital