Capital Gains Exposure - CGE

Capital gains exposure is the value an investment fund has gained or lost, and what that might expose the investor to, tax-wise, when they sell or convert that investment into cash. A positive gains exposure means the fund has gained, and the investor might have to pay capital tax on that gain. A negative gains exposure means the fund has lost money. That loss can get carried forward to offset future positive gains exposure.

Capital gains tax will be assessed on the total gain at the time the asset is sold. Example: Bob invested in Somnolent Spinning Inc. at $7. He promptly went to sleep and woke up 10 years later after a Princess Aurora-like slumber. Now, the stock is at $300. Bob wants to sell, but he lives in a state with high capital gains taxes. So he'd pay 40% tax on the gain of $293 per share. Bob thinks maybe it's better to go back to sleep for awhile.