Undistributed Capital Gains

Sometimes, instead of distributing long-term capital gains to you in the form of a capital gain distribution, a mutual fund keeps the capital gains and pays a tax on them.

You have to include the undistributed capital gains in income, but you can take a credit for the tax the mutual fund paid on your behalf.

You should receive a Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, from the mutual fund.