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From: roth@im4u.UUCP (Mark Roth)
Newsgroups: net.invest
Subject: Re: Mutual Fund Sale Question
Message-ID: <812@im4u.UUCP>
Date: Fri, 14-Mar-86 11:29:11 EST
Article-I.D.: im4u.812
Posted: Fri Mar 14 11:29:11 1986
Date-Received: Sun, 16-Mar-86 10:54:22 EST
References: <29900009@gypsy.UUCP>
Reply-To: roth@im4u.UUCP (Mark Roth)
Organization: U. Texas CS Dept., Austin, Texas
Lines: 11

You are right in that you do not have to pay tax on the dividends you
already paid xes on.  However, I would think that the dividends 
you reinvested are now considered another investment, so you must
pay any capital gains on them.  Consider if you had taken the
dividends in cash and then immediately made the same investment in
the fund.  This gets really hairy when you reinvest monthly dividends
because then the last 6 month's reinvestments will be treated as
short term gains/losses and everything before that as long term.
And of course if you make monthly payments to your fund then you've
got all those seperate investments as well.   It's really not that
hard to figure out, just time consuming.