Question

Mutual Fund distributions

Forum|Forum|4 years ago
March 14, 2022
1 reply
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Activity in my mutual fund this past year includes reinvestment of both short term and long term capital gain distributions. The 1099-DIV form I received from my investment advisor reflects the reinvested short term capital gain distributions in line 1a, Ordinary Dividends and the reinvested long term capital gain distributions in line 2a, Total Capital Gain Distributions. Is this reporting correct?

Result being, reinvested short term capital gain distributions are taxed at ordinary rates and reinvested long term capital gain distributions are taxed at usually lower capital gain rate.

Not A Product Question

M

Mike9241

yes. the way the law looks at it is that you actually received the income and then put it back to buy more shares. this law has been on the books for decades.

also under the law, short-term distributions are treated as ordinary dividends not even as STCG.