1040-US: Entering nondividend distribution

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Question

How do I enter a nondividend distribution reported on Form 1099-DIV, box 3?

Answer

A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation. Any nondividend distribution you receive is not taxable to you until you recover the basis of your stock. After the basis of your stock is reduced to zero, you must report the nondividend distribution as a capital gain. Whether you report the gain or loss as a long-term or short-term capital gain or loss depends on how long you have held the stock.

To enter this transaction in UltraTax CS, open Screen B&D in the Income folder and use the Schedule for detail statement dialog in the Schedule D section. To maintain a record of the nondividend distributions received for the applicable tax year, use the Record of nondividend and liquidating distributions statement dialog in Screen Info in the General folder, or in Screen Broker in the Income folder.

For further information on the treatment of nondividend distributions, refer to Chapter 1 in Publication 550, Investment Income and Expenses.

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