Frequently Asked Questions
- Year-End Tax Forms and Statements
- Composite Form 1099
- Form 1099-DIV
- Form 1099-B
- Cost Basis Reporting Information
- Form 1099-Q
- Form 1099-R
- Form 5498 and Form 5498-ESA
- Form 1042-S
- Tax Withholding for Retirement Accounts
- Capital Gains—Long-Term, Short-Term
- Direct U.S. Government Obligation
- Foreign Source Income/Foreign Tax Paid
The sale or exchange of securities (including mutual fund shares) generally results in a capital gain or loss. When a security is sold for more than the price at which it was purchased, a capital gain results. When a security is sold for less than its purchase price, a capital loss results.
Short-term capital gains are capital gains earned on the sale of securities (including mutual fund shares) held for 1 year or less. When a fund distributes its short-term capital gains, these amounts will be reported to you as an Ordinary Dividend in Box 1a of Form 1099-DIV, and will be taxable at ordinary income tax rates.
Long-term capital gains are currently taxed at favorable rates. These reduced tax rates apply to long-term capital gains earned on the sale of securities (including mutual fund shares) held for more than 1 year and to long-term capital gains distributed by mutual funds. When a fund distributes its long-term capital gains, these amounts will be reported to you as a Capital Gain Distribution on Form 1099-DIV, Box 2a.
Ordinary income dividends are dividends paid by a mutual fund from its net investment income. Ordinary income dividends, along with any distributions of net short-term capital gains, are reported to shareholders as Ordinary Dividends in Box 1a of Form 1099-DIV.
Capital gain distribution information is available on the Tax Information page for each fund located on this website. Please use fund search for the tax information for a specific fund.
Additional information on how to report capital gains and losses, including determining the tax basis you have in your mutual fund shares, can be obtained by reading IRS Publications 544, Sales and Other Dispositions of Assets, and 551, Basis of Assets. These publications can be downloaded from the IRS website.
Important Legal Information
The information contained in this Tax Center is not intended to be a complete discussion of all federal or state income tax requirements. This information cannot be used by an investor to avoid any income tax penalties that may be imposed under the Internal Revenue Code. Investors should seek advice from a financial and/or tax advisor about the potential tax implications of their investments in Franklin Templeton fund(s) based on their individual circumstances.
For US residents only.