Form 2439: Long-Term Capital Gains a Fund Kept and Taxed for You
Published November 5, 2026
Some mutual funds and real estate investment trusts (REITs) keep part of their long-term capital gains instead of paying them out to shareholders. When that happens, the fund pays the tax on those gains itself. The fund then sends each shareholder a Form 2439. The form is called a notice to shareholder of undistributed long-term capital gains.
This guide explains the form in plain language. It is general information, not advice about your own investments or return. For questions about a specific fund, contact the fund company. For how a gain fits your full return, ask a tax professional.
The two parts of the story
The IRS form covers two amounts. The first is your share of the long-term gain the fund kept. The second is the tax the fund paid on that gain. The fund's tax is a credit for you. You claim the credit on your own return. This is why the form has a box for the tax paid.
The form is issued by a regulated investment company (RIC) or a REIT. A RIC is a regulated investment company. Most of them are mutual funds. The IRS says the fund must send Copies B and C to each shareholder by the 60th day after the end of the fund's tax year.
What the boxes mean
- Box 1a shows your share of the total undistributed long-term capital gains.
- Box 1b shows your share of the unrecaptured section 1250 gain, which is a special kind of gain from real estate.
- Box 1c shows your share of the section 1202 gain, which comes from the sale of qualified small business stock.
- Box 1d shows your share of the collectibles gain, which is taxed at a 28% rate.
- Box 2 shows the tax the fund paid on the gains in Box 1a. This is the amount you can claim as a credit.
Box 1a is the total gain you report. Boxes 1b, 1c, and 1d are parts of that total that need special handling. The IRS instructions tell you where each part goes on Schedule D. The form also tells you that the tax in Box 2 can be claimed as a credit.
Where the amounts go on your return
For an individual, the IRS instructions say to report the Box 1a amount as a long-term capital gain on Schedule D (Form 1040). The instructions name a line in Schedule D for this. Because forms change, use the line in the current year's Schedule D instructions.
The Box 2 credit for tax paid by the fund goes on Schedule 3 (Form 1040). The instructions name a credit line for undistributed capital gains. Check the current year's Schedule 3 instructions for the exact line number.
The boxes in 1b, 1c, and 1d also affect the worksheets for the 25% rate gain and the 28% rate gain on Schedule D. The IRS instructions explain how to complete those worksheets. Many people find this part hard, so a tax professional can help.
Which copy goes where
Copy B is for you. The form says to attach Copy B to your income tax return. Keep Copy C for your own records. The fund keeps Copy D.
If you are not the actual owner of the shares, the instructions cover a different process. A nominee must complete the form for each owner and pass the copies along. This rule is for a person who holds shares for someone else.
Common mistakes to avoid
The first mistake is to skip the gain because you did not receive cash. A kept gain is still reported. The second mistake is to forget the credit in Box 2. The third is to enter the Box 1a amount as ordinary dividend income. The IRS instructions say it is a long-term capital gain.
Another common issue is mixing up the form with a Form 1099-DIV. The 1099-DIV reports dividends the fund paid. The 2439 reports gains the fund kept. Check the form name at the top before you enter the amounts.
Next steps
Save your Copy B with your fund statements. Compare the Box 1a total with the fund's year-end statement. Read the Schedule D and Schedule 3 instructions for the current year before you file. If the numbers are large or the fund is complex, ask a tax professional to check the entries.
Sources: Sources: IRS, Form 2439 (Rev. November 2021) and its instructions for the regulated investment company and shareholder (https://www.irs.gov/pub/irs-pdf/f2439.pdf); Schedule D (Form 1040) and Schedule 3 (Form 1040) instructions, current year This is general information, not advice about your specific return.
