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BUSINESS Saturday 16 February 2019
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Double tap: Investors face taxes for funds that fell in 2018

By STAN CHOE tions. Funds make these dis-
Associated Press tributions to all shareholders
NEW YORK (AP) — As if who own the fund as of a
the worst year for stocks in certain date. This year, the
nearly a decade weren't average distribution has
bad enough, many inves- been worth 11 percent of
tors now have to pay a tax the fund's net asset value,
bill on top of it. according to Russell. That's
The headache for investors akin to a fund with a $100
is a result of how mutual price tag paying out an $11
funds are structured and distribution to shareholders,
how many times the funds' who are then left with $11
managers bought and sold in cash and a fund share
shares through 2018. Be- that suddenly drops to $89.
cause of the way tax laws Shareholders will owe taxes
work, the majority of inves- on that $11, and the rate
tors with a U.S. stock mutual can range from zero for
fund or ETF received some- lower-income investors to
thing called a "capital- nearly 41 percent for the
gains distribution" late last highest-income taxpay-
year. ers if the distributions are
Investors holding funds in a categorized as "short-term"
tax-advantaged account, This Wednesday, Feb. 13, 2019, in Zelienople, Pa., shows schedule D for form 1040 and instructions gains. Not only are funds
like a 401(k) or IRA, don't printed from the Internal Revenue Service web page that are used for 2018 U.S. federal tax returns. paying out higher distribu-
need to worry about it. But Associated Press tions — Russell says the 11
if they hold it in a taxable percent average payout
account, watch out. They'll that has already hurt them Pape, director of consult- because fund managers for this past year is up from
owe taxes on it, due by this once: The most popular ing services at Russell In- have to tally up the gains 8 percent the year before
spring, and the rate could category of stock mutual vestments. they make each year from — more funds are also giv-
be as high as 40.8 percent fund lost 6.3 percent last Investors can be on the buying and selling stocks ing them to their sharehold-
in a few cases. And the last year. hook for taxes even if they and bonds, and then pass ers — 86 percent of all U.S.
thing many investors want is "The possible tax hit will add don't sell any shares of the them on to their investors stock funds, up from 65
to pay taxes on something insult to injury," says Frank fund themselves. That's as capital-gains distribu- percent.q
Trade talk optimism pushes stocks higher in early trading

By DAMIAN J. TROISE Deere warned that farmers
Associated Press are refraining from buying
NEW YORK (AP) — Plans to new equipment because
extend key trade talks be- of the ongoing trade war
tween the U.S. and China between the U.S. and Chi-
drove stocks broadly high- na.
er in early trading. The company gave inves-
The early gains mark a tors a mixed fourth-quarter
turnaround after the mar- report, with profit falling
ket ended lower Thursday short and revenue beating
following a disappointing forecasts. It also said tariffs
holiday sales report. The had discouraged custom-
S&P 500 index had risen the ers such as farmers from
prior four trading days. buying tractors and other
China's government said machinery, an indication
negotiators plan to meet in of how the U.S.-China trade
Washington next week for dispute has weighed on
more talks aimed at resolv- the manufacturing sector.
ing the trade war between The stock was slightly lower.
the world's largest econo- WHEN THE CHIPS ARE UP:
mies. Two days of talks Chipmaker Nvidia rose 2.5
wrapped up Friday in Bei- percent following its strong
jing and a March 2 dead- fourth-quarter profit report.
line hangs over both sides. An Investor stands in front of private stock trading boards at a private stock market gallery in Despite a downturn in reve-
The U.S. is set to impose Kuala Lumpur, Malaysia, Friday, Feb. 15, 2019. nue, the company expects
more tariffs on Chinese Associated Press demand to increase as
goods after March 2, esca- the year moves forward. Its
lating a trade war that has the S&P 500 are higher. items, plunged. Chipmaker a.m. The S&P 500 index rose forecast for the year beat
already raised prices on Corporate earnings con- Nvidia rose on strong profit 0.9 percent and The Nas- Wall Street forecasts.
materials and products for tinued rolling out the results and a good forecast daq composite gained 0.5 The company was hurt dur-
companies and consum- fourth-quarter reporting for the year. percent. The Russell 2000 ing the previous quarter by
ers. period nears an end. New- KEEPING SCORE: The Dow index of smaller companies a plunge in demand from
Bank, energy and materials ell Brands, which counts Jones Industrial Average rose 0.9 percent. the cryptocurrency sector
stocks are showing the big- baby products among its rose 336 points, or 1.3 per- DEERE IN HEADLIGHTS: Agri- and lower gaming console
gest gains. All 11 sectors in Sharpie and Rubbermaid cent, to 25,775 as of 10:30 cultural equipment maker sales.q