Why these investors might face a surprise tax bill around the corner

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Good news: Overall, the U.S. stock market has had a strong year. Bad news: The mutual funds you're holding in a taxable account might have some hefty capital gains that they'll distribute by the end of the year. And the IRS wants its share.

Some mutual funds are more likely than others to have large capital gains distributions.

"If you have inflows, it reduces your capital gains," said Kinnel. "If you increase your investor base by 20% this year, you've spread the gains across more people." Finally, manager changes — especially bringing on a new subadvisor — could also set off capital gains.

 

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