“You’re A Mean One, Mr. Grinch” is a Christmas song that was originally written and composed for the 1966 cartoon special “How The Grinch Stole Christmas!” The lyrics were written by Theodor “Dr. Seuss” Geisel, the music was composed by Albert Hague, and the song was performed by Thurl Ravenscroft. The song’s lyrics describe the Grinch as being foul, bad-mannered and sinister using increasingly creative metaphors and synonyms, beginning with the opening line “you’re a mean one, Mister Grinch”.

In this live-action adaptation of the beloved children’s tale by Dr. Seuss, the reclusive green Grinch (Jim Carrey) decides to ruin Christmas for the cheery citizens of Whoville. Reluctantly joined by his hapless dog, Max, the Grinch comes down from his mountaintop home and sneaks into town to swipe everything holiday-related from the Whos.   However, the bitter Grinch finds a hitch in his plans when he encounters the endearing Cindy Lou Who.  The result is that after initially stealing Christmas, The Grinch learns that Christmas goes on without all the tinsel and presents and he rides back into town and joins the celebration.

Narrator: And what happened, then?  Well in Whoville they say – that the Grinch’s small heart grew three sizes that day.  And then – the true meaning of Christmas came through, and the Grinch found the strength of ten Grinches plus two.

For investors, The Grinch tends to come early every December with the Short and Long Term Capital Gain Distributions only he is not taking away from the Whos, he is delivering taxable income that creates tax bills that come due April 15.  Be careful and don’t be surprised if that big present from the Mutual Fund company might be a BIG TAXABLE DISTRIBUTION.

What is a Capital Gain Distribution?

According to Investopedia  – A capital gains distribution is a payment to shareholders that is prompted by a fund manager’s liquidation of underlying stocks and securities in a mutual fund or derived from dividend and interest earned by the fund’s holdings minus the fund’s operating expenses. Capital gains distributions must be made by a mutual fund manager because tax law dictates that substantial portion of investment income and capital gains must be paid to investors.

Uncle Sam and Mutual Funds

Investors often do not realize that these capital gains distributions occur even if you don’t sell a single share or if the mutual fund has lost money.

Have other questions about how your mutual fund just might be “The Grinch”?  Give us a call and we can look to see what your year-end gain distribution might be and are there other alternatives to getting an annual tax bill from your mutual fund.

Stay warm this chilly December weekend.


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Michael Tannery CPA CDFA® AIF® ●  CEO
Registered Principal

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