Page 33 - Individual Forms & Instructions Guide

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
date following the declaration of a divi- you held the XYZ stock for less than 61 taxed until you recover your cost (or
dend on which the purchaser of a stock days. other basis). You must reduce your cost
isn't entitled to receive the next dividend Example 2. The facts are the same as (or other basis) by these distributions.
payment. When counting the number of in Example 1 except that you bought the After you get back all of your cost (or
days you held the stock, include the day stock on July 15, 2022 (the day before other basis), you must report these dis-
you disposed of the stock but not the day the ex-dividend date), and you sold the tributions as capital gains on Form 8949.
you acquired it. See the examples that stock on September 16, 2022. You held For details, see Pub. 550.
follow. Also, when counting the number the stock for 63 days (from July 16, Dividends on insurance poli-
of days you held the stock, you can't 2022, through September 16, 2022). The cies are a partial return of the
count certain days during which your $500 of qualified dividends shown in TIP premiums you paid. Don’t re-
risk of loss was diminished. See Pub. box 1b of Form 1099-DIV are all quali- port them as dividends. Include them in
550 for more details. fied dividends because you held the income on Schedule 1, line 8z, only if
• Dividends attributable to periods stock for 61 days of the 121-day period they exceed the total of all net premiums
totaling more than 366 days that you re- (from July 16, 2022, through September you paid for the contract.
ceived on any share of preferred stock 14, 2022).
held for less than 91 days during the
181-day period that began 90 days be- Example 3. You bought 10,000 Lines 4a and 4b
fore the ex-dividend date. When count- shares of ABC Mutual Fund common
ing the number of days you held the stock on July 8, 2022. ABC Mutual IRA Distributions
stock, you can't count certain days dur- Fund paid a cash dividend of 10 cents a You should receive a Form 1099-R
ing which your risk of loss was dimin- share. The ex-dividend date was July 16, showing the total amount of any distri-
ished. See Pub. 550 for more details. 2022. The ABC Mutual Fund advises bution from your IRA before income tax
Preferred dividends attributable to peri- you that the part of the dividend eligible or other deductions were withheld. This
ods totaling less than 367 days are sub- to be treated as qualified dividends amount should be shown in box 1 of
ject to the 61-day holding period rule equals 2 cents a share. Your Form Form 1099-R. Unless otherwise noted in
just described. 1099-DIV from ABC Mutual Fund the line 4a and 4b instructions, an IRA
• Dividends on any share of stock to shows total ordinary dividends of $1,000 includes a traditional IRA, Roth IRA,
the extent that you are under an obliga- and qualified dividends of $200. How- simplified employee pension (SEP)
tion (including a short sale) to make re- ever, you sold the 10,000 shares on Au- IRA, and a savings incentive match plan
lated payments with respect to positions gust 11, 2022. You have no qualified for employees (SIMPLE) IRA. Except
in substantially similar or related proper- dividends from ABC Mutual Fund be- as provided next, leave line 4a blank and
ty. cause you held the ABC Mutual Fund enter the total distribution (from Form
• Payments in lieu of dividends, but stock for less than 61 days. 1099-R, box 1) on line 4b.
only if you know or have reason to Use the Qualified Dividends Exception 1. Enter the total distribution
know that the payments aren't qualified TIP and Capital Gain Tax Work-
dividends. sheet or the Schedule D Tax on line 4a if you rolled over part or all of
the distribution from one:
• Dividends from a corporation that Worksheet, whichever applies, to figure
first became a surrogate foreign corpora- your tax. See the instructions for line 16 • Roth IRA to another Roth IRA, or
tion after December 22, 2017, other than for details. • IRA (other than a Roth IRA) to a
a foreign corporation that is treated as a qualified plan or another IRA (other
than a Roth IRA).
domestic corporation under section
7874(b). Line 3b Also enter “Rollover” next to line 4b.
Example 1. You bought 5,000 shares Ordinary Dividends If the total distribution was rolled over,
enter -0- on line 4b. If the total distribu-
of XYZ Corp. common stock on July 8, tion wasn't rolled over, enter the part not
2022. XYZ Corp. paid a cash dividend Each payer should send you a Form rolled over on line 4b unless Exception 2
of 10 cents per share. The ex-dividend 1099-DIV. Enter your total ordinary div- applies to the part not rolled over. Gen-
date was July 16, 2022. Your Form idends on line 3b. This amount should erally, a rollover must be made within
1099-DIV from XYZ Corp. shows $500 be shown in box 1a of Form(s) 60 days after the day you received the
in box 1a (ordinary dividends) and in 1099-DIV. distribution. For more details on roll-
box 1b (qualified dividends). However, You must fill in and attach Sched- overs, see Pub. 590-A and Pub. 590-B.
you sold the 5,000 shares on August 11, ule B if the total is over $1,500 or you
2022. You held your shares of XYZ received, as a nominee, ordinary divi- If you rolled over the distribution into
Corp. for only 34 days of the 121-day dends that actually belong to someone a qualified plan or you made the rollover
period (from July 9, 2022, through Au- else. in 2023, include a statement explaining
gust 11, 2022). The 121-day period be- what you did.
gan on May 17, 2022 (60 days before Nondividend Distributions Exception 2. If any of the following ap-
the ex-dividend date), and ended on ply, enter the total distribution on line 4a
September 14, 2022. You have no quali- Some distributions are a return of your and see Form 8606 and its instructions
fied dividends from XYZ Corp. because cost (or other basis). They won't be to figure the amount to enter on line 4b.

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