Definition: A mutual fund may distribute capital gains on investments they have sold off. These will be reported on your 1099-DIV box 2 as capital gains distributions. If you have only capital gains distributions and no other capital gains, you may report the figure directly on Form 1040A line 10 or Form 1040 line 13 without filling out a Schedule D.
Capital Gain Distributions
By William Perez, About.com
Explore Tax Planning: U.S.
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