If the Nasdaq's 40 percent drop didn't hurt enough, wait until you see your tax bill. Experts say that investors could be hit twice as hard this year due to a bad stock market and a larger tax bite. They are predicting that mutual funds will pay out a record amount of capital gains this year.
Investors are learning this week what their distributions are, and indications are that the distributions could top last year's record of more than $200 billion. With federal capital gains taxes running 20 percent or more, bigger gains mean a windfall for the federal treasury. Of the 10 largest mutual funds in 2000, only three posted gains year-to-date: Investment Company of America, Washington Mutual Investors and Growth Fund of America, according to smartmoney.com.
Capital gains distributions hit a record last year of more than $200 billion, and have reached $690 billion in the last six years through this month, according to Lipper Inc., which tracks mutual fund data.
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