@article {Singal82, author = {Vijay Singal}, title = {Tax Savings with Mutual Fund Distributions}, volume = {29}, number = {1}, pages = {82--88}, year = {2002}, doi = {10.3905/jpm.2002.319866}, publisher = {Institutional Investor Journals Umbrella}, abstract = {Under the current tax code, investors receiving mutual fund distributions are subject to capital gains taxes based on the mutual fund{\textquoteright}s, not the investor{\textquoteright}s, holding period. Investors can use this wrinkle in the tax code to their benefit by converting short-term capital gains into long-term capital gains. An investor buys into a mutual fund with long-term capital gains just before its distribution date, and sells it immediately after the distribution. This process captures for the investor the long-term capital gains distributed, but also produces a short-term capital loss as the mutual fund price falls by the amount of the distribution. The short-term capital loss can be offset against other short-term capital gains of the investor. The investor can save on taxes because the capital gains are now long-term, not short-term. Current mutual fund shareholders are not hurt by the actions of these transitory investors, because the distributions are now divided into a greater number of shares, making the per share distribution smaller, and thereby reducing the tax liability of existing shareholders}, issn = {0095-4918}, URL = {https://jpm.pm-research.com/content/29/1/82}, eprint = {https://jpm.pm-research.com/content/29/1/82.full.pdf}, journal = {The Journal of Portfolio Management} }