A Special Summary and Forecast Of Federal and State Tax Developments
MUTUAL-FUND INVESTORS may profit by procrastinating in coming weeks.</br></br>Investors thinking about buying mutual-fund shares soon should be careful not to fall into a painful year-end tax trap. Stock-market mutual funds typically distribute income and capital gains to shareholders around the end of each year, usually December. If you invest in a fund shortly before such a payout, you generally will owe 1995 taxes on the entire distribution, unless, of course, you bought the shares for a tax-deferred retirement account.</br></br>This year, many stock-market funds are likely to make unusually big payouts because of booming stock prices. Thus, investors need to be especially careful to check with funds about year-end distribution plans before buying, warns Stephen W. DeFilippis of West Suburban Income Tax Service in Glen Ellyn, Ill. Ask how much -- and when -- a fund expects to pay.</br></br>Then consider waiting to buy until just after the record date, he says.</br></br>THE SUPREME COURT declines to hear a municipal-bond case.