Sylvia owns 100 shares of Maxima Growth mutual fund.In December she received a check for $50,payment of ordinary income dividend distributions and capital gains distributions.Sylvia also noticed in her daily newspaper listings that Maxima Growth is now worth $2 per share more than what she purchased it for at the beginning of the year.How much will Sylvia's holdings in Maxima Growth add to her taxable income for the year assuming she decides not to sell the fund this year?

Question

Quizplus · Accepted Answer

The $50 received from ordinary income dividend distributions and capital gains distributions is taxable income. The increase in share value ($2 per share increase on 100 shares = $200) is not taxable until the shares are sold.

Sylvia Owns 100 Shares of Maxima Growth Mutual Fund