Mutual funds typically make two types of taxable distributions that are reported separately on shareholders’ income tax returns.
First, dividend distributions come from the interest and dividends earned by the underlying securities held in the funds portfolio after expenses have been paid. Dividend distributions can also include net gains from the sale of underlying securities that were held in the fund’s portfolio for one year or less, also known as short-term capital gains.
Second, long-term capital gains distributions occur when there are net gains from the sale of any underlying security that was held in the fund for more than a year. Aspiration will provide all of our clients with a tax form each year that will indicate your earnings from the Aspiration Flagship Fund.