See Capital Gains and Qualified Dividends for more details on the "unrealized gains" field, the last field in this screenshot below.
Distributed earnings are of two types:
1) Share of Interest and Other Ordinary Asset-Income Percentage (ordinary interest and non-qualified dividends) and
2) Dividends and Realized Capital Gains Percentage (long-term qualified dividends and cap gains)
These two earnings types are entered on your 1040 as income.
There is a 3rd type that is a little confusing to some, the unrealized long-term capital gains percentage; that is, the capital appreciation that is accrued and taxed, not annually like the first two, but when realized as a position is sold (signaled in MaxiFi by an annual withdrawal shown in Annual Saving and Withdrawal report).
This is the percent of your total return each year that is not of type (1) or (2) above. It accumulates and is added to the dollar amount of unrealized capital gains that you may have entered in the very bottom field. When do you pay tax on this accrued capital gains? In MaxiFi, the event that triggers this is a withdrawal from saving per the Annual Saving and Withdraw report and it taxes a pro rata share of these accrued long term capital gains. If we didn't ask for this percentage amount, we'd be ignoring the fact that each year as the market goes up, you have gains that are not distributed but nonetheless accruing in your account and subject to long term gains tax when they are sold (withdrawn).
I have a $100,000 balance and 75K of that is basis and 25K is gains from previous years that I've not yet realized. Now a year goes by, it's now the end of the year, and I have a total return of 5% or $5000 on my money. I look at my brokerage account tax statement and it says that they distributed $1000 in qualified dividends. (that's type 2 above). They also said that they distributed $500 in ordinary interest (type 1 above). I would enter those two amounts in my 1040 form where the type 2, qualified dividends, gets a lower tax rate than the ordinary interest. But that just accounts for 1,500 of the 5000 I of my total return I earned. The other $3,500 is just capital appreciation and at the start of the new year I need to add that 3,500 to the 25K I had entered at the start of the previous year because eventually I will realize that long-term gain. But MaxiFi wants to know how to project this "typical" proportion of undistributed long-term gain each year in the model. Thus, if the numbers in this example were typical, I'd enter 20% (the $1,000) as "Dividends and Realized Capital Gains Percentage" (type 2 above), and I'd enter 70% as undistributed "Unrealized Capital Gains Percentage." This 70% is undistributed long term gains. We can think of it also as merely capital appreciation. So 70% is undistributed long-term gain and 20% is the distributed qualified dividends, so that means that the final 10% (the $500) has to be ordinary interest. MaxiFi works in annual increments so there is no accounting for short-term gains.
What's potentially confusing is that nowhere in your end-of-year tax statements does it ever show this undistributed long-term gain, the capital appreciation. It's an implicit amount of your total return for the year. Nor does the IRS 1040 form ask for reporting of these unrealized gains until they are realized. But MaxiFi needs to keep track of these unrealized gains because eventually MaxiFi is going to withdraw all of your regular assets down to $0 in the final year. Each year you will update the dollars within your pool of regular assets that represent these unrealized gains.