How are capital gains taxes assessed?

If the fund has a net gain on THEIR sales for the year, your share of that is a capital gain distribution and you'd pay tax on that for that year. You can add the amount of the cg dist to your basis though, so you don't pay tax again on that many dollars when you eventually sell.

You pay capital gains taxes when you sell the fund or on any capital gains distributions that the fund may make during the year.

You will pay income taxes every year on any dividends the fund may pay.

Edit:

No, the capital gains distributions become part of your basis in determining your gains when you sell the stock.

Say you bought $100 worth of XYZ fund today at $1 a share. In December they declare a capital gains distribution of $0.02 per share and dividends of $0.05 per share. Generally that money is reinvested back into the fund and let's pretend the share price is still $1 so you have 107 shares total. When you do your 2009 return you pay income taxes on the $5 of dividends and capital gains on the $2 of distributed capital gains.

Then next summer (2010) the share price is at $1.50 and you decide to sell. Your shares sell for $160.50. Your cost basis is $107, so you have $53.50 in capital gains to report on your 2010 return.

No, you are not taxed twice. Suppose you buy for 1000 at $10/share share for $10,000. Suppose in the first year there are $1000 of capital gains distributions. You may take them in cash or reinvest them. Either way you have $1000 of income to be taxed. Suppose you reinvest them buying more shares, then sell all your shares for $13000. Your cost basis for the sale is the $10000 original investment + the $1000 reinvestment, leaving you with a profit of $2000. You started with $10000, ended up with $13000, paid tax on $3000. No double taxation.

capital gains are assessed when you sell the fund, 15% for long term capital gains-1 year or longer

where *** short term gains are assessed under your income bracket as high as 35%

and no you dont pay income tax because you pay capital gains

quarterly and yearly dividends are taxed as income tho