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Old 03-23-2015, 06:24 PM
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Short term capital gain distribution treated as ordinary dividend

Hi everyone,

I received a short term capital gain distribution from a mutual fund, but the 1099 groups it in with ordinary dividends. I would like to count the gain against my capital losses but am unsure of how to do that. How do I treat the distribution as a gain instead of a dividend?

Thanks for your advice!



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Old 03-23-2015, 11:50 PM
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Originally Posted by xantax View Post
Hi everyone,

I received a short term capital gain distribution from a mutual fund, but the 1099 groups it in with ordinary dividends. I would like to count the gain against my capital losses but am unsure of how to do that. How do I treat the distribution as a gain instead of a dividend?

Thanks for your advice!
Capital gain dividends also are called capital gain distributions. They're paid to you or credited to your account by such sources as mutual funds and real estate investment trusts . The Payer sends you Form 1099-DIV . The amount of the capital gain dividends are shown in box 2a . These distributions are reported as long-term capital gains, no matter how long you've owned your shares in the mutual fund or REIT.



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Old 03-24-2015, 12:18 AM
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Originally Posted by Wnhough View Post
Capital gain dividends also are called capital gain distributions. They're paid to you or credited to your account by such sources as mutual funds and real estate investment trusts . The Payer sends you Form 1099-DIV . The amount of the capital gain dividends are shown in box 2a . These distributions are reported as long-term capital gains, no matter how long you've owned your shares in the mutual fund or REIT.
Thanks for your reply, Wnhough.

The short term capital gain distribution is showing up in box 1a on my 1099. There is a separate, long term distribution that shows up in 2a. Later on in the document, there is a more detailed page that says "Total Short-Term Capital Gains (Included in Box 1a)." How do I make sure the IRS treats it as a capital gain rather than an ordinary dividend?



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Old 03-24-2015, 12:33 PM
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Originally Posted by xantax View Post
Thanks for your reply, Wnhough.

The short term capital gain distribution is showing up in box 1a on my 1099. There is a separate, long term distribution that shows up in 2a. Later on in the document, there is a more detailed page that says "Total Short-Term Capital Gains (Included in Box 1a)." How do I make sure the IRS treats it as a capital gain rather than an ordinary dividend?
as said, distributions in 2a are reported as long-term capital gains, no matter how long you've owned your shares in the mutual fund or REIT.However, Short-term gain distributions are included in a fund's ordinary dividend distribution I box 1a; therefore, capital losses may not be subtracted from these distributions when computing taxes.While most people are painfully aware of short-term capital gains, short-term capital gains distributions are often a misunderstood. Short-term capital gains distributions are considered ordinary income and, unlike short-term capital gains, cannot be offset by capital losses. The difference between short-term capital gains and short-term capital gains distributions is what causes all the fuss and confusion. For instance, if you own a mutual fund for a few months and then sell out for a gain, you have incurred a short-term capital gain. If you don't have enough losses to offset this gain, the net result is a short-term gain and you will have to pay ordinary income tax rates on the amount of money you made as a result of the sale. In this scenario in which you gained from buying and selling shares in the mutual fund, you are able to use any short-term gains you might realize against other capital losses to reduce your tax liability.as you own a mutual fund that subjects you to short-term capital gains distributions, then you must report them on your tax return as ordinary income. Unlike short-term capital gains, capital losses do not offset short-term capital gains distributions and reduce your tax liability. .If you or your financial advisor believes that short-term capital gains distributions are just like short-term capital gains, then you might be unpleasantly surprised at tax time, when you owe more in taxes than you planned.aslongas the fund is following normal IRS requirements, the value will be included in Box 1a and not in Box 2a. Box 1a, ordinary dividends, is the sum of income and short term gains. I think it is more likely there was a communication than that the fund is following normal 1099 reporting rules. it is by way of a notification to the exchange and a press release to brokers;you need to speak to the fund manger and ask how brokers get this info from the fund.



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Old 03-24-2015, 05:19 PM
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Ah, so the terminology just makes things confusing. Thanks for clearing all that up.



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