Nondividend Distribution

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Subject Author Date Nondividend Distribution kmnugent 02-14-2009  Re: Nondividend Distribution Bill Brown 02-14-2009   Re: Nondividend Distribution Steve Pope 02-14-2009  Re: Nondividend Distribution Barry Margolin 02-14-2009   Re: Nondividend Distribution Steve Pope 02-14-2009  Re: Nondividend Distribution Rich Carreiro 02-14-2009
Posted by kmnugent on February 14, 2009, 4:08 pm Please log in for more thread options Dear NG: I've re-invested the monthly dividends from a mutual fund which, according to my 1099 DIV, turned out to be partly Nondividend Distributions. Am I correct in my assumptions that since I've re-invested the dividend/nondividend distribution that it does NOT reduce my basis? ANd dhd I NOT re-invested, then myasis would be reduced by the nondividend distribution? Thanks in advance for any insights. -Kevin -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Bill Brown on February 14, 2009, 4:50 pm Please log in for more thread options On Feb 14, 4:08 pm, kmnug...@hotmail.com wrote: > Dear NG: > I've re-invested the monthly dividends from a mutual fund which, > according to my 1099 DIV, turned out to be partly Nondividend > Distributions. > > Am I correct in my assumptions that since I've re-invested the > dividend/nondividend distribution that it does NOT reduce my basis? > ANd dhd I NOT re-invested, then myasis would be reduced by the > nondividend distribution? > Reinvestment of the dividend portion of the distributions did increase your basis. The non-dividend portion did decrease your basis but you increased it again by the same amount by reinvesting the non-dividend portion. It's a wash. The net effect is your basis (from before the distributions) increased by the dividend portion of those distributions. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Steve Pope on February 14, 2009, 6:29 pm Please log in for more thread options >Reinvestment of the dividend portion of the distributions did increase >your basis. > >The non-dividend portion did decrease your basis but you increased it >again by the same amount by reinvesting the non-dividend portion. It's >a wash. > >The net effect is your basis (from before the distributions) increased >by the dividend portion of those distributions. I agree, although there's the unlikely scenario that the non-dividend distribution exceeded the original basis. In that case, the excess would become capital gain. Steve -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Barry Margolin on February 14, 2009, 4:56 pm Please log in for more thread options In article kmnugent@hotmail.com wrote: > Dear NG: > I've re-invested the monthly dividends from a mutual fund which, > according to my 1099 DIV, turned out to be partly Nondividend > Distributions. > > Am I correct in my assumptions that since I've re-invested the > dividend/nondividend distribution that it does NOT reduce my basis? > ANd dhd I NOT re-invested, then myasis would be reduced by the > nondividend distribution? It doesn't matter whether you reinvest or not, distributions don't affect the cost basis of your original shares. When you reinvest, you increase the cost basis of your entire holding. As far as taxes are concerned, reinvesting is the same as receiving a check and purchasing shares on the same date as the distribution. Since you now own more shares, the cost of the shares (which is the same as your distribution) is added to your total cost basis. -- Barry Margolin, barmar@alum.mit.edu Arlington, MA *** PLEASE don't copy me on replies, I'll read them in the group *** -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Steve Pope on February 14, 2009, 6:29 pm Please log in for more thread options >In article > kmnugent@hotmail.com wrote: > >> Dear NG: >> I've re-invested the monthly dividends from a mutual fund which, >> according to my 1099 DIV, turned out to be partly Nondividend >> Distributions. >> >> Am I correct in my assumptions that since I've re-invested the >> dividend/nondividend distribution that it does NOT reduce my basis? >> ANd dhd I NOT re-invested, then myasis would be reduced by the >> nondividend distribution? > >It doesn't matter whether you reinvest or not, distributions don't >affect the cost basis of your original shares. Strongly disagree. Steve -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted brokerage avg. basis vs. nondividend distribution March 26, 2009, 9:35 pm 72T Distribution July 1, 2009, 10:42 pm accidental IRA distribution November 28, 2006, 1:03 am Massachusetts IRA distribution March 6, 2007, 5:44 am Partnership Distribution - Not on K-1 October 8, 2007, 6:43 pm Re: Partnership Distribution - Not on K-1 October 9, 2007, 8:28 pm Early distribution from an IRA April 20, 2008, 10:23 am IRA distribution in shares of stock. 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