Stock Dividend Tax Date

[Burke]

Dividend ex-date is 12/22/10, dividend record date is 12/27/10, dividend payment date is 1/25/11. In what year is it reported on the 1099?

[ChEAr$]

Dividend ex-date is 12/22/10, dividend record date is 12/27/10, dividend payment date is 1/25/11. In what year is it reported on the 1099?

should be in 2011. Corporation has no impetus to report it in 2010 anyway, since it has nothing to do with corporate net profit.

[Roland Slugg]

If it's a mutual fund (or a REIT), that dividend was taxable in 2010. Of course, the recipient should be able to figure it out by looking at the 1099-DIV form that was received last January.

[Burke]

It was not a mutual fund but a separately held stock. I was trying to figure out the number of shares held from the 2010 dividend form 1099-DIV using the gross amount paid for the year divided by the div rate per share. So I needed to know if the "date paid" was the qualifying info for calculating this. In other words, if it was paid in 2011, but declared and recorded in 2010, was it actually on the 1099 for 2010. Client is deceased.

[FEDUKE404]

Taxable when paid

It was not a mutual fund but a separately held stock. I was trying to figure out the number of shares held from the 2010 dividend form 1099-DIV using the gross amount paid for the year divided by the div rate per share. So I needed to know if the "date paid" was the qualifying info for calculating this. In other words, if it was paid in 2011, but declared and recorded in 2010, was it actually on the 1099 for 2010. Client is deceased.

The only date that really matters is the payment date. If that is in calendar year 2011, then it is calendar year 2011 income regardless of when it was declared or "ex" dates.

Some mutual funds can pay dividends in January, and such income be deemed to be taxable for the year that ended in December, but that does not appear to be the case here.

If you wish, I can PM you a link I use to verify historical dividends.

FE

[S T]

Mutual vs Stock Dates

First date is Declaration date - which Board of Directors announce the intention of paying a dividend

Second date is the Date of record or known as ex-dividend date - otherwise known as the day upon which the stockholders of record are entitled to the "upcoming" dividend

Third date is the Payment Date - the date the dividend is actually given to the shareholder of the company

Burke this might give you the answer you are searching for -- from Fidelity site

My 2010 Form 1099–DIV shows mutual fund distributions that my account statement shows were not paid until January 2011. Why is there a difference between my Fidelity statements and what is reported to the IRS?
Fidelity must adhere to IRS requirements when reporting on Forms 1099–DIV, 1099–INT, and 1099–B, which may result in differences between what is on your monthly and quarterly statements and what is reported to the IRS. For example, transactions on Form 1099–B must be reported based on the trade date even though your statements reflect sales based on the settlement date. Additionally, unlike dividends from individual securities, which are typically taxed in the year the dividends are paid, mutual fund distributions declared as payable to shareholders of record in October, November, or December and paid prior to February 1 of the following year are taxable to shareholders based on the record date, not when paid. For example, mutual fund distributions with a record date in December 2010, and paid in January 2011, are reported and taxed as 2010 dividend distributions.

Sandy

[Burke]

Thank you for the info. To FEDDUKE404 I wanted to let you know I have the payment history. Got it from the company's website. That is how I knew the payment was made in 2011. But you can send me your site too. And to ST, thanks for the Fidelity info cite. I spent at least 30 minutes trying to determine this from various sites including the IRS, and instructions for 1099-DIV before posting. Could not find the specific answer anywhere.

[New York Enrolled Agent]

I spent at least 30 minutes trying to determine this from various sites including the IRS, and instructions for 1099-DIV before posting. Could not find the specific answer anywhere.

As backup to Sandy's post, here is the Internal Revenue Code..

§852(b)(7)

(7) Time certain dividends taken into account.
For purposes of this title, any dividend declared by a regulated investment company in October, November, or December of any calendar year and payable to shareholders of record on a specified date in such a month shall be deemed—
(A) to have been received by each shareholder on December 31 of such calendar year, and

(B) to have been paid by such company on December 31 of such calendar year (or, if earlier, as provided in section 855 ).

The preceding sentence shall apply only if such dividend is actually paid by the company during January of the following calendar year.


For non-mutual fund dividends, §301 and Reg. 1.301-1(b) provide that generally the dividends are taxable in the year of receipt.

[FEDUKE404]

More on dividend payments

Thank you for the info. To FEDDUKE404 I wanted to let you know I have the payment history. Got it from the company's website. That is how I knew the payment was made in 2011. But you can send me your site too. And to ST, thanks for the Fidelity info cite. I spent at least 30 minutes trying to determine this from various sites including the IRS, and instructions for 1099-DIV before posting. Could not find the specific answer anywhere.

I have sent you the PM with the link. It should be helpful to you.

For the vast majority of my clients, I never see anything resembling "record date" so I just go with the Forms 1099-DIV. Some of my more astute clients track their "income" and then ask me about the discrepancy shown on the tax paperwork. This would fall into something such as getting a dividend on January 20 and then seeing that income included on the Form 1099-DIV for the previous year. OTOH, it has been my experience that most funds with such type of delayed payments will routinely tell their clients about how such a process works. But not everyone reads everything that comes in the mail....

I'm really surprised you have not encountered this scenario before. Perhaps you had and just were not aware of it??

FE