1099-CAP – Changes in Corporate Control and Capital Structure

You may have to recognize a gain on cash, stock, or other property you received in exchange for your stock in a corporation that undergoes a change in control or a substantial change in its capital structure.  This gain would be reported on Schedule D.  If box 6 is checked, you cannot take a loss.

1099-DIV – Dividends and Distributions

Ordinary dividends from box 1a are reported on line 9a of Form 1040 or 1040A, and on Schedule B (1040) or Schedule 1 (1040A) if required.  Qualified dividends from box 1b are reported on line 9b of Form 1040 or 1040A.  These are dividends eligible for the 15% or 5% capital gain rates.

Capital gain distributions from box 2a are reported on Schedule D of Form 1040.  But if you do not have any other capital gains or losses, and there are no amounts reported in boxes 2b, 2c, or 2d of this form, you can report the capital gain distributions from box 2a directly on line 13 of Form 1040, or line 10 of Form 1040A.

Unrecaptured section 1250 gain from box 2b goes into the “Unrecaptured Section 1250 Gain Worksheet” in the Schedule D instructions.  Section 1202 gain from box 2c is gain on qualified small business stock held for over 5 years and is eligible for a 50% exclusion.  You report the total gain in the long-term section of Schedule D and then, on the line directly below, you enter "Section 1202 Exclusion" in column (a) and enter 50% of the total gain as a negative amount.  The 28% collectibles gain in box 2d  goes into the “28% Rate Gain Worksheet” in the Schedule D instructions.

Nontaxable distributions from box 3 are returns of your cost or investment.  Your basis in the stock should be reduced by these distributions for purposes of determining your gain or loss when you sell the stock.  If you recover your entire cost, any additional distributions for that stock should be reported as capital gains on your tax return, even if they are shown as nontaxable distributions on the 1099-DIV.

Investment expenses from box 5 can be claimed as a miscellaneous itemized deduction on Schedule A.  If there are foreign taxes paid, shown in box 6, you can claim a foreign tax credit by completing Form 1116 or you can claim the tax as an itemized deduction on Schedule A.  You may be able to claim a foreign tax credit directly on Form 1040 (line 46) without completing Form 1116 if this was your only foreign source income, and your foreign taxes are not more than $300 ($600 if married filing jointly).