Thanks, Bpgui and DH. That makes sense. I do get a 1099 (?) each year listing the dividends I have to claim on my taxes. I was unclear on how the capital gains worked, so I appreciate your answers. Honestly, it's such a small amount of money that the tax hit will be negligible. I really just want to make sure I understand correctly how it works.
In practice most bond funds rarely generate capital gains, especially intermediate and short term funds. But recently those type of funds, especially the intermediate have made capital gains.
But really, it should not be a big amount of money and you only pay it because you made a profit anyway. So enjoy!