Quote:
Originally Posted by roob1
I invested 200K in a Vanguard mutual fund, and at year's end (2021 and 2022), it was valued at approx. 165K. Both years it was reported I had about 10K in capital gains. How can I have capital gains (and tax liability) when the investment value is less than I invested?
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However, if the mutual fund has losses during the year, you can’t deduct them because the loss is unrealized.
To claim a loss from your mutual fund investment, you must have "realized" the loss -- that is, you must have sold some or all of the shares before the end of the year. If you have not sold any of your fund shares, your loss is "unrealized," meaning that the loss is not fixed or final -- as long as you still own the shares, their value could go up next week, next month or next year.
However, this doesn’t work with gains. You pay them even if they are unrealized.