We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. Learn more.

If you held on to your fund portfolio through the market downturn, you have plenty of reason to smile this year. The average large-cap stock fund has rebounded some 23% so far this year. And some have done far better — small growth funds are ahead 30%, while Latin America stock funds have zoomed nearly 50%.

And best of all, you will probably pay little or no taxes on those gains.

That’s the assessment of Tom Roseen, a senior research analyst at Lipper, who tracks mutual fund taxes.Because of the gigantic losses suffered by funds last year — the typical equity portfolio plunged 40% — most have huge tax loss carryforwards, which can be used to offset your gains. As Roseen said in a recent interview, “Those losses mean that despite the huge market run-up, most shareholders will enjoy a nice tax holiday this year.”

Fund families are starting to post their estimated taxable distributions on their websites, though most won’t have the numbers available until November or December, when distributions are generally made. The American Funds family, for one, has announced that it expects to pay zero or nominal capital gains distributions this year. And Royce Funds has already released capital gains estimates for individual funds. The highest payout will be just $0.42 a share for Royce Focus Value (RYFVX), which works out to less than 3% of net asset value.

Still, some shareholders may get a bit of nick, Roseen says, particularly those who hold leveraged exchange traded funds -- ETFs which seek to deliver twice or more times the return, or the inverse, of a particular benchmark. If your ETF bet the right way, you may have racked up big gains, which will be taxed as income. And bond investors, who didn’t suffer the big losses of stock funds shareholders last year, may also see a tax bill.

There is a downside of the market rally, however: The tax holiday may not continue into 2010. “After last year’s losses, I though we’d have a tax holiday for the next two to four years,” says Roseen. “But because of the rapid recovery, we could have wiped it out entirely.”