Dividends that are reinvested, why would I have capital gains. On money that is not in hand.?

Stock funds that have capital gains distribute them to shareholders. 

If I understand your question correctly.

There is a process that is going on, and you'll have to follow it step by step.

• You have a stock that you held for a while.  
  • You have 100 shares.  
  • You originally paid $0.50 for each of them, and
  • the current value is $1 per share.
• You get a $5 dividend.  That has a tax due as soon as you got it regardless of what you do with.
• You reinvest in the stock and that gives you 5 more shares with a basis of $1 each.
• The next day you sell 5 shares.
• The IRS has a First In First out accounting method. (FIFO)
  • The original shares are at $0.50, so your bases for 5 shares is $2.50.
  • You sold the 5 shares for $5.00.
  • That gives you a capital gain of $2.50.
• You will get the benefit of the $1.00 per share price after you sell the next 95 shares.

If you simply want to take the dividend, don't reinvest in the stock.

If this does not completely answer your question, please contact us again and provide some additional details.