The mutual fund manager must send the investor a tax information statement so the investor can declare
taxes. The investor must account for all capital gains or loses and dividends even if the dividends and capital gains are reinvested into the mutual fund. When mutual funds shares are sold/redeemed the mutual fund manager should aid the investor in determining the purchase bases for the shares sold/redeemed. Recent federal tax codes have modified the treatment of dividends and capital gains depending on the investor's income level and tax bracket.
