AboutWarren Boroson Expertise Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.
Experience Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.
Expert: Warren Boroson Date: 4/17/2006 Subject: Mutual Fund Tax Question
Question Mr. Boroson,
I know that mutual funds sometimes have losses.
1. Do they ever distribute those losses?
2. Can they distribute those losses?
3. If mutual funds do distribute losses, how can I find one that will do this?
Answer Dear Steven:
Mutual funds don't distribute their losses. They subtract them from their gains. Or, if they don't have gains, the fund's net asset value declines.
You can lock in the losses by selling shares of the fund.
If you do have losses at the end of the year, you might sell your shares and buy shares of a similar fund (but not substantially identical fund if you want to deduct the loss).
I suspect that the only way you can deduct investment losses, wirthout selling shares, is to buy shares of a limited partnership -- a so-called tax shelter.
