Question

John owns shares in a mutual fund and shares of individual stocks in his brokerage account. The Form 1099-DIV from the mutual fund indicates $2,000 of capital gains distributions and the form from the brokerage firm indicates $6,000 of capital gains distributions. The brokerage statement also indicated a long term capital loss of $1,850 on a stock sale How should John report the capital gains distributions? a) He should report them directly on Form 1040. b) He should report them on Form 8949 and then on Schedule D. c) He should report them on Schedule D. d) He is not required to report them until he sells the underlying securities

Answer 1

Form 1099-DIV provides report on qualified funds’ capital gains distribution along with capital losses. When the taxpayer has disposed an investment in qualified opportunity fund during the year, the taxpayer has to attach Form 8949 to Schedule D and comply additional requirements for gain or loss.

Form 8949 deals on details with respect to sales and other dispositions of capital assets while Schedule D provides details including the capital gains distribution and losses.

Hence, John has full up first 8949 and attach it to Schedule D.

The correct option is b) He should report them on Form 8949 and then on Schedule D

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