I am in the USA. I have some mutual fund shares that I bought directly from a mutual fund company many years ago spread out over 20+ purchases at different prices.

Last year the fund apparently gave out a capital gain distribution that was reinvested. I can see that in the 1099-DIV form that was sent to me, box 2a ("Total capital gain dist") shows something like $1000.

Now, I am used to seeing more information that my online brokerage provides me on a 1099-B / 8949 showing every stock sale and its cost basis. I would then calculate the net gain or loss accordingly.

How do I treat this capital gain distribution? Is the $1000 treated as a net gain? I called the mutual fund company, and they said there's no cost basis associated with it.

  • A capital-gains distribution is already net: it is the amounts the fund received for selling securities minus their basis in each such sale (and minus any available carryforward from a prior year), divided evenly over all the shares of the fund. Because you had the distribution reinvested, your basis in your holding in the fund is increased by that amount, and in the future when you sell (unless you die first) your gain will be that much lower. – dave_thompson_085 Apr 12 '16 at 21:35
  • @dave_thompson_085: Yes, that's what I figured. It was then a question of whether box 2a is "long-term" or "short-term" capital gain. In the absence of that information, I needed cost basis and purchase date to get the net gain. – stackoverflowuser2010 Apr 13 '16 at 18:23
  • I don't get that logic -- both short- and long-term items can have basis. But 2a is only long-term. The instructions on the back (perhaps a separate page if using a substitute form) and also the "Where to Report" table in the 1040 instructions tell you to put 2a on Schedule D line 13, which is in Part II Long-Term. Note you don't put it on 8949 so it doesn't need dates, or basis. If a fund makes short-term gain distributions they are just included in 1a (and not included in 1b) so they add to ordinary income on 1040 line 9a. – dave_thompson_085 Apr 16 '16 at 9:03

The capital gain is either short-term or long-term and will be indicated on the 1099-DiV. You pay taxes on this amount as the capital gain was received in a taxable account (assuming since you received a 1099-DIV). More info here: https://www.mutualfundstore.com/brokerage-account/capital-gains-distributions-taxable

  • The problem is that I don't know if the "Total capital gain dist" value in 1099-DIV box 2A is long-term or short-term. – stackoverflowuser2010 Apr 13 '16 at 18:26

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