Capital Gains Distributions

If you own shares in a mutual fund or real estate investment trust (REIT) that pays out capital gains to shareholders every year or so, these amounts are also reported on Form 8949 and Schedule D. If the mutual fund company has total long-term gains on sales of securities during the year, they are reported to you in Box 2a of Form 1099-DIV. Any short-term gains are included in the amount of ordinary dividends, and they are simply taxed as dividends.

Report your total capital gain distributions on Line 13 of Schedule D. You do not have to file a Schedule D or Form 8949 if all of the following apply: the only amounts you have to report are from Box 2a of Forms 1099-DIV; none of your Forms 1099-DIV have an amount listed in Boxes 2b, 2c, or 2d; and you are not filing Form 4952 or the amount on line 4e of that form is zero. Instead, you can enter your capital gain distributions on Line 13 of Form 1040 and check the box on that line.

In some cases, you may have undistributed capital gains to deal with, if your mutual fund or REIT reports them to you.

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