[net.invest] Mutual fund taxation

jwp@uwmacc.UUCP (Jeffrey W Percival) (10/29/85)

I just recently got into two funds, my first ever.  I don't
know what sort of information they provide at tax time.  How much
help are the end of year statements in filing tax returns?  Is it
really true that stock market mutual fund earnings do not qualify
for the $200 (?) dividend deduction?  I was hoping they would;
my Andrew Tobias book recommends that I get enough low-risk
stock to take advantage of the full value of this deduction.  Will
I have to go out and buy real stock shares, from an authentic
broker (gasp!) in order to do this?  Are there any other subtleties
to keep in mind when dealing with mutual funds?  Or stockbrokers?

	Thanks for any info!
	Jeff (a fledgling investor)

-- 
	Jeff Percival ...!uwvax!uwmacc!jwp

wjh@bonnie.UUCP (Bill Hery) (11/08/85)

> .........................................................Is it
> really true that stock market mutual fund earnings do not qualify
> for the $200 (?) dividend deduction?  

In a common stock the earnings the mutual fund had will be in
qualifying dividends (regular dividends), long term capital gains, 
short term capital gains, and non-qualifying dividends (e.g., from
interest).  They should report to you your pro rata share of these
categories, and you report them to the IRS as such.  Thus, the
qualifying dividend portion can be excluded up to the $200 limit,
and the l.t. capital gains taxed at the lower rate.  This is based
on my experience with a few funds and myown reading of IRS and other
publications.  I've had no problems reporting to IRS this way.