Instructions For Form 1099-Div - 2006 (Page 3 of 26) in pdf

2006

Department of the Treasury

Internal Revenue Service

Instructions for Form

1099-DIV

(Revised November 2006)

3. Substitute payments in lieu of dividends. For payments

Section references are to the Internal Revenue Code unless

received by a broker on behalf of a customer in lieu of dividends

otherwise noted.

as a result of a loan of a customer’s securities, see box 8 in the

2005 Instructions for Form 1099-MISC.

What’s New

Substitute payments in lieu of dividends may be

TIP

reported on a composite statement to the recipient with

Exempt-interest dividends. Section 502 of the Tax Increase

Form 1099-DIV. See Notice 2003-67, which is on page

Prevention and Reconciliation Act of 2005 has changed section

752 of Internal Revenue Bulletin 2003-40 at

6049(b) by requiring the reporting of interest on state or local

irs-irbs/irb03-40.pdf and Announcement 2003-75, which is on

bonds that are tax-exempt under section 103(a). After

page 1195 of Internal Revenue Bulletin 2003-49 at

December 31, 2005, exempt-interest dividends from regulated

pub/irs-irbs/irb03-49.pdf.

investment companies will be reported on Form 1099-INT,

4. Payments made to certain payees including a

Interest Income.

corporation, tax-exempt organization, any IRA, U.S. agency,

state, the District of Columbia, U.S. possession, or registered

Reminder

securities or commodities dealer are not reported on Form

1099-DIV.

In addition to these specific instructions, you should also use

the 2006 General Instructions for Forms 1099, 1098, 5498, and

Certain distributions commonly referred to as

W-2G. Those general instructions include information about:

•

“dividends” are actually interest and are to be reported

Backup withholding

•

on Form 1099-INT. These include so-called “dividends”

Magnetic media and electronic reporting requirements

CAUTION

•

on deposit or on share accounts in cooperative banks, credit

Penalties

•

unions, domestic building and loan associations, domestic and

Who must file (nominee/middleman)

•

federal savings and loan associations, and mutual

When and where to file

•

savings banks.

Taxpayer identification numbers

•

Statements to recipients

Qualified Dividends

•

Corrected and void returns

•

Except as provided below, qualified dividends are dividends

Other general topics

paid during the tax year from domestic corporations and

You can get the general instructions from the IRS website at

qualified foreign corporations. For individuals, estates, and

or by calling 1-800-TAX-FORM (1-800-829-3676).

trusts, qualified dividends are taxed at a maximum rate of 15%

(generally, 5% for individuals whose other income is taxed at

the 10% or 15% rate).

Specific Instructions for Form 1099-DIV

Exceptions. The following dividends are not qualified

File Form 1099-DIV, Dividends and Distributions, for each

dividends.

•

person:

Dividends the recipient received on any share of stock held

•

To whom you have paid dividends (including capital gains

for less than 61 days during the 121-day period that began 60

dividends) and other distributions on stock of $10 or more,

days before the ex-dividend date. See the instructions for box

•

For whom you have withheld and paid any foreign tax on

1b on page DIV-3. When determining the number of days the

dividends and other distributions on stock,

recipient held the stock, you cannot count certain days during

•

For whom you have withheld any federal income tax under

which the recipient’s risk of loss was diminished. The

the backup withholding rules, or

ex-dividend date is the first date following the declaration of a

•

To whom you have paid $600 or more as part of a liquidation.

dividend on which the purchaser of a stock is not entitled to

receive the next dividend payment. When counting the number

Dividends

of days the recipient held the stock, include the day the

If you make a payment that may be a dividend but you are

recipient disposed of the stock but not the day the recipient

unable to determine whether any part of the payment is a

acquired it.

•

dividend by the time you must file Form 1099-DIV, the entire

Dividends attributable to periods totaling more than 366 days

payment must be reported as a dividend. See regulations under

that the recipient received on any share of preferred stock held

section 6042 for a definition of dividends.

for less than 91 days during the 181-day period that began 90

days before the ex-dividend date. See the instructions for box

Exceptions

1b on page DIV-3. When determining the number of days the

You are not required to report on Form 1099-DIV the following:

recipient held the stock, you cannot count certain days during

1. Taxable dividend distributions from life insurance

which the recipient’s risk of loss was diminished. Preferred

contracts are reported on Form 1099-R, Distributions From

dividends attributable to periods totaling less than 367 days are

Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,

subject to the 61-day holding period rule above.

•

Insurance Contracts, etc.

Dividends that relate to payments that the recipient is

2. Exempt-interest dividends from regulated investment

obligated to make with respect to short sales or positions in

companies retain their tax-exempt status, but after December

substantially similar or related property.

•

31, 2005, are reported on Form 1099-INT, Interest Income (see

Dividends paid by a regulated investment company that are

section 852(b)(5)).

not treated as qualified dividend income under section 854.

Cat. No. 27978B

Instructions For Form 1099-Div - 2006 Page 3

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