Saturday Screen: Funds That Could Stick You With a Fat Tax Bill

Tempted to buy one of those hot funds that posted big gains during the fall and winter tech run-up? Be careful. You could wind up paying for other people's gains on your tax bill.

A significant portion of last year's gains -- and the tax liability that goes with them -- may still be on the fund's books. That's because the distribution your fund makes in December typically covers only gains booked through October. Many funds, particularly those with big tech-stock bets, rose sharply in November and December. In the last two months of 1999, the tech-heavy Nasdaq Composite rose more than 37% and TheStreet.com's Internet Index shot up more than 51%.

If you own owned such a fund on the way up, you're merely getting taxed on gains you've earned. But if you buy one of these funds now, you could be left paying part of the tab for everyone else's prosperity. ...