Irs Publication 564 - Mutual Fund Distributions

Table 1A. Reporting Mutual Fund Distributions on Form 1040

IF you receive . . .

AND . . .

THEN report the distribution on . . .

your total ordinary dividends received are

Form 1040, line 9a

$1,500 or less

● your total ordinary dividends received are

ordinary dividends

Schedule B, line 5

more than $1,500, or

(Form 1099-DIV, box 1a)

● you received ordinary dividends as a

nominee

Form 1040, line 9b and Schedule D, line

you have to file Schedule D

23 (or Schedule D Tax Worksheet, line 2

qualified dividends

(Form 1099-DIV, box 1 (b))

Form 1040, line 9b, and Qualified Dividends

you do not have to file Schedule D

and Capital Gain Tax Worksheet, line 2

you have to file Schedule D

Schedule D, line 13, column (f)

you do not have to file Schedule D

Form 1040, line 13a, and Qualified Dividends

and Capital Gain Tax Worksheet, line 3

you have post-May 5 gain (box 2b) and

Schedule D, line 13, column (g)

have to file Schedule D

capital gain distributions

you have post-May 5 gain (box 2b) and do

Form 1040, line 13b, and Qualified Dividends and

(Form 1099-DIV, boxes 2a–2f)

not have to file Schedule D

Capital Gain Tax Worksheet, lines 11 and 19

Schedule D, line 35 (See Schedule D

you have qualified 5-year gain (box 2c)

instructions)

you have unrecaptured section 1250

Schedule D, line 19

gain (box 2d)

(See Schedule D instructions)

you have Section 1202 gain (box 2e)

see Schedule D instructions

you have Collectibles (28% rate) gain (box 2f)

see Schedule D instructions

return of capital (nontaxable) distributions

generally, not reported

(Form 1099-DIV, box 3)

exempt-interest dividends (not shown on

Form 1040, line 8b

Form 1099-DIV)

you have total undistributed capital

Schedule D, line 11, column (f)

gains (box 1a)

you have post-May 5 gain (box 1b)

Schedule D, line 11, column (g)

you have qualified 5-year gain (box 1c)

Schedule D, line 35 (See Schedule D

undistributed capital gains (Form

instructions)

2439, boxes 1a–1f)

you have unrecaptured section 1250

Schedule D, line 19

gain (box 1d)

(See Schedule D instructions)

you have Section 1202 gain (box 1e)

see Schedule D instructions

you have Collectibles (28% rate) gain (box 1f)

see Schedule D instructions

Report any amount in excess of your basis in your mutual fund shares on Schedule D, line 8, column (f) and column (g), if applicable (or on Schedule D, line 1, if you

held your mutual fund shares 1 year or less).

Capital Gain Distributions

fund in box 2. Attach Copy B of Form 2439 to

Exempt-interest dividends are not shown on

Form 1099 – DIV.

your return.

These distributions are paid by mutual funds

Increase to basis. When you report undis-

Information reporting requirement. Al-

from their net realized long-term capital gains.

tributed capital gains from a mutual fund, you

though exempt-interest dividends are not tax-

The Form 1099 – DIV (box 2a) you receive or the

able, you must report them on your tax return if

must increase your basis in the shares. You

fund’s statement will tell you the amount you are

you are required to file. This is an information

must keep Copy C of Form 2439 to show this

to report as a capital gain distribution. Capital

reporting requirement and does not convert

increase. See Adjusted Basis, later.

gain distributions are taxed as long-term capital

tax-exempt interest to taxable interest. Also, this

gains regardless of how long you have owned

income is generally a “tax preference item” and

Exempt-Interest Dividends

the shares in the mutual fund.

may be subject to the alternative minimum tax. If

Undistributed capital gains. Mutual funds

you receive exempt-interest dividends, you

A mutual fund may pay exempt-interest divi-

may keep some of their long-term capital gains

should get Form 6251, Alternative Minimum

dends to its shareholders if it meets certain re-

and pay taxes on those undistributed amounts.

Tax — Individuals, for more information.

quirements. These dividends are paid from

You must report your share of these amounts as

tax-exempt interest earned by the fund. Since

long-term capital gains, even though you did not

Return of Capital

the exempt-interest dividends keep their tax-

actually receive a distribution. You can take a

(Nontaxable) Distributions

credit for any tax paid because you are consid-

exempt character, do not include them in in-

ered to have paid it.

come. However, you may need to report them

A distribution that is not out of earnings and

on your return. See Information reporting re-

Form 2439. The fund will send you Form

profits is a return of your investment, or capital,

quirement, next. The mutual fund will send you a

2439, instead of Form 1099 – DIV, showing your

in the mutual fund and is shown in box 3 of Form

statement within 60 days after the close of its tax

share of the undistributed long-term capital

1099 – DIV. These return of capital distributions

gains in box 1a and any tax paid by the mutual

year showing your exempt-interest dividends.

are generally not taxed and are sometimes

Page 3

Irs Publication 564 - Mutual Fund Distributions - 2003 Page 3

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