Schedule D Question

[himiko]

No state.
This is a very basic question: referring to Form 1040, Schedule D, when listing acquired shares of stock (Part I, #1; and Part II, #8) does this include shares acquired through paid dividends and capital gains?
Thank you.What is the name of your state?

 

[abezon]

Yes. Reinvested dividends are considered separate purchases when determining the holding period (long or short term). If you get quarterly dividends & sell all shares, you'll have some shares that are short term.

 

[himiko]

Thank you very much.... follow-up question please to verify that purchases and dividends paid would be listed as "acquired" in Parts I and II, #'s 1 and 8, but capital gain distributions would not be listed since the total capital gain distributions are added separately (line 13) (ref 2005 Sch D)?
Thank you in advance.

 

[abezon]

Thank you very much.... follow-up question please to verify that purchases and dividends paid would be listed as "acquired" in Parts I and II, #'s 1 and 8, but capital gain distributions would not be listed since the total capital gain distributions are added separately (line 13) (ref 2005 Sch D)?
Thank you in advance.

Ummm, acquisitions are not listed in parts I & II until the shares are sold. Dividends & cap gains that are reinvested are reported on a form 1099-DIV. The dividends are reported on lines 9a/9b; the capital gains distribution is reported on either line 13 of Schedule D or on line 13 of the 1040 if no D is required. When shares purchased through a DRIP are sold, the acquisition date is the date the dividends/gains were paid out & new shares were bought. I often see situations where most shares are long term, with a small number of DRIP shares being short term.

Shares are sold on a 'first in first out' basis unless you specify which shares should be sold, so the short term DRIP shares are the last to be sold.

 

[himiko]

Thank you for your indulgence… my basic question seems to be a little more complicated for me than I thought. I am referring to the reporting of the sale of mutual fund shares, which I report on the Schedule D. My original question was should I list on lines 1 and 8 shares acquired via dividend and capital gain distributions? The form instructions are not clear on this, although Publication 550 helped some. My mutual fund accounts re-invest dividends and capital gains automatically. However, I report the dividends and capital gains “paid” every year, as you mentioned, on Form 1040, lines 9 and 13. Since I haven’t sold any, I have had no need to file the Schedule D. The reason for my question is that it seems that since I reported distributions in the year earned, and paid tax on those distributions during each respective tax year, reporting again as “acquisitions” then paying taxes again when sold seems to be that those “acquisitions” are being taxed twice. Perhaps I am mistaken. Which brings me back to my original question of whether or not it is required to list each distribution as an acquisition on Schedule D, lines 1 or 8, when I sell the shares.
I appreciate your help. Once again, thank you.

 

[anteater]

Those mutual fund distributions on which you paid tax and which you reinvested are added to your cost basis - they are the acquisition cost of the additional shares you receive when you reinvested the distributions. It's really no different than if the fund company had sent you a check and you immediately bought new shares in the fund.

You still have to segegate the disposed of shares by the length of time that you held them - greater than one year and one year or less.

"Various" will do as the acquired date when you sell shares in a block that have been acquired at different dates. (Just be sure to retain your records documenting when and how the shares were acquired.)

 

[abezon]

Also, there's a good chance your mutual fund company and/or broker are tracking your basis & will include a 'detail statement' with your 1099-B in the year you sell, showing what your proceeds, basis, & holding period were for each sale.

 

[LdiJ]

And based on all of the asnwers that you received above....you probably need a tax professional to handle your tax return.

 

[himiko]

Thank you all for your inputs.