Can mutual fund short term capital gain distribution be offset with short term capital loss from sale of stock? Turbotax is treating distribution as ordinary income.

Forum|Forum|4 years ago
April 14, 2022
2 replies
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If gain can be offset, how do you do this in Turbotax Premier?

TurboTax Premier Online

Best answer by Hal_Al

@Mike9241 's answer is correct. Short term capital gain distributions are NOT short term capital gains for tax purposes. They are ordinary dividends. As such, capital losses cannot be used to reduce how much of the box 1a dividends (form 1099-DIV) gets taxed.

JohnB5677

What is the mutual fund distribution being reported on? If it is a 1099-B you will be able to offset short-term gains with long-term losses. However, if it is reported in a different form it may not be.

Please let us know if it is being reported on a different form.

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garygroomAuthor

The distribution is being reported on Form 1099-Div on Line 1a. Details for the distribution note that it is a short term gain. However it is being reported on Line 1a as though it was an ordinary non-qualified dividend. I called broker and they said this is the only way they can report it even though it is clearly stated to be a short term gain. I have a short term loss from commodity trading that I want to use to offset this gain....but it appears I cannot use the short term commodity loss to offset the short term gain distribution from the mutual fund distribution unless you can figure out a way to do it.

Hal_AlAnswer

Employee

Mike9241

no mutual fund short-term capital gain distributions by tax law are treated as ordinary divdends.

rbrookefox

@Mike9241 Thanks, but punctuation changes meaning: "no etc." is totally different from "no, etc.", the former being what you said and the latter being what you meant, I think.