KeshaH
Expert Alumni

State tax filing

The 1099-DIV that you received likely shows all capital gains distributions, but for this question you should only include gains from shares purchased after December 31, 2011. Arizona allows you to reduce your capital gains from assets purchased after 2011 by 25%. So, if you use the amount from the 1099-DIV you'll likely overstate your income. You'll need to determine which shares, if any, were purchased after 2011 from dividend reinvestment.

 

If none of the dividend reinvestment occurred after 2011, you wouldn't need to adjust any of the capital gain income on the AZ return. If there was dividend reinvestment, you'll need to check your statements or contact your investment company for records showing which shares were purchased through dividend reinvestment after 2011 and then recalculate your gain using only those shares. If your investment company offers cost-basis tracking, they may have this information available for you broken down by purchase date.

 

If the investment company doesn't have this data and you can't reasonably reconstruct it, you won't be able to make this adjustment.