Caught off guard today

[ILLMAS]

I was asked a tax question that I was not able to answer and has left me thinking, TP's asked if there was a way to get the cost basis of 1099-DIV capital gains? 

[Yardley CPA]

Would the financial institution who issued the 1099-Dive be able to provide information?

[FDNY]

Hmmm, good question.   if this CG is from a brokerage house they are probably from more than one mutual fund.  If it is from an individual fund it would be easier to identify.  But then where would you enter it as the cap gains from the 1099Div input transfer to a box on Sch D with no place for basis (or maybe there is an adjustment box on input sheet,  not sure, I'll have to look). 

I wonder if the basis is already calculated into the client's basis in the fund as those CGs are reinvested most of the time.  Too much to think about and my head is starting to ache.

[BHoffman]

https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/mutual-funds-costs-distributions-etc/mutual-funds-costs-distributions-etc-4.         Here is a helpful link 

[FDNY]

Upon further thought (I know this is dangerous) I would think those capital gains are calculated with the basis within the fund of each individual stock that the fund sells.  But then why do you never see capital losses reported on 1099Div when fund is doing poorly?   The fund must sell its losers like any other investor.  Something to think about this weekend in your spare time. 

[jklcpa]

25 minutes ago, FDNY said:

Upon further thought (I know this is dangerous) I would think those capital gains are calculated with the basis within the fund of each individual stock that the fund sells.  But then why do you never see capital losses reported on 1099Div when fund is doing poorly?   The fund must sell its losers like any other investor.  Something to think about this weekend in your spare time. 

The mutual fund doesn't pass through its net losses to shareholders but carries those forward to offset gains in future years, so ultimately those will be "reported" by means of a reduced net cap gain in the future.

[Possi]

On ‎3‎/‎23‎/‎2018 at 4:04 PM, BHoffman said:

https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/mutual-funds-costs-distributions-etc/mutual-funds-costs-distributions-etc-4.         Here is a helpful link 

Thanks for this link. I was looking for the code to use in Column F on the 8949 to disallow the loss on personal property.

This is the sale of a second home.

Can I simply enter the selling value and cost as the same?

Or enter the actual loss with the code "L" that says "You have a nondeductible loss other than a loss indicated by code W..."

[Roberts]

When you buy a mutual fund, there are accrued capital gains earned by someone else that can be passed on to you in a few months. If buying them in a taxable account, you should probably wait until after they pay out their yearly Capital Gain distribution. In an IRA it doesn't really matter.

 

[Hahn1040]

yes Use code L for nondeductible loss

that will zero out the loss for you

[Possi]

13 minutes ago, Hahn1040 said:

yes Use code L for nondeductible loss

that will zero out the loss for you

Thanks for the affirmation!