Question I have a personal portfolio of about $40,000 invested in 10 mutual funds. (This is my own money outside of my retirement account). Since the size of investments varied from $200 to $10,000, I recently rebalanced the funds so there would be about $4000 in each fund. The problem is, now I will obviously have a huge tax bill next year due to various redemptions. I will probably have to redeem over $1000 (maybe even $2000)worth of shares next year at tax time to pay for taxes on this year's redemptions. Is there any way (legal) around this annoyance? Having to redeem mutual funds to pay for taxes on mutual funds seems like double taxation to me. Unless I have excess income at the end of the year (through a bonus at work), this will go on forever. Help!
Answer Had you not done so, you may want to meet with your tax advisor and go over all the sales and purchases you did to rebalance and make sure you have the original purchase receipts. Only your tax advisor or CPA will be able to advise you on the issue of capital gains after reviewing the information. Sorry if I did not answer your question.
