"Capital Gain or Loss from Assets Acquired After Decemer 21, 2011"

[DiddlyD]

it means that although it was sold after 2012 you have to pay attention to when it was purchased which is what qualifies for this special deduction.

[DiddlyD]

I sold an investment in 2020 that was purchased in 1987 and I just discovered after I already submitted my State Tax 140 to AZ, that I had an error computed by Turbo Tax on this very issue.  Turbo Tax entered the my long term capital gains in the special capital gains treatment for property "purchased after December 31, 2011" which I am not eligable for.  Please be sure to check your state to insure this did not happen to you because I have to amend now.  Thank goodness it only resulted in a lower refund.

[ZoltanB45]

You must be referring to the 2020 tax return. If your refund was reduced, that means you must owe money (assuming you got paid the original refund) and owe penalties and interest.  If this is the case, you can request a first time abatement of the penalties. IRS abatement letter

[DiddlyD]

I suggest checking any tax year you claim the sale of investments, because the AZ 140X already had a page of the amend dedicted to just reporting the error on claiming this captials gains special treatment and correcting it.  I won't have any penalities since my taxes were paid in full (over-paid) and timely.

[MaggieMae11]

My question is not around the SALES of an asset, but around the purchasing.  Is the reinvestment of dividends considered "purchasing" after December 2011?  I've not sold one cent, but always reinvested dividends.  So are those dividends considered in any amount "purchased" after December 2011.  

[MaggieMae11]

I'm trying to get an answer to the same question.  Did you ever get a reply?

[DiddlyD]

I didn't ask a question, I posted the resolve.   What you interpet as "re-investing" can mean different things to different people.  I don't know if you can roll over stocks if that is what you did without a tax consequence.  If you receive or held the capital from selling one and invested in another they are two different events.  It's important you can properly define your situation according to IRS rules.  I should probably get your situation defined properly by IRS standards and then research the tax rules governig it before putting all your eggs into posting questions on here which may or may not fit your scenario.  You can review the tax codes at IRS.gov.  If you are doing your taxes online with Turbo Tax you are suppose to be able to get live CPA tax help.

[MaggieMae11]

Thanks for your reply.  What I meant by reinvesting was when the dividends are distributed they are set to auto reinvest into the same fund.  No money is taken out of the fund.  I never have possession of the funds nor do I redirect them to a different account.  So, I was wondering if those automatically reinvested dividends can be considered as assets purchased (shares obtained with the auto reinvested dividends) after December, 2011 (which is the question within the TT system)  I am not a professional tax preparer and that's why I was seeking additional insight.  

[MaggieMae11]

THANK YOU SO MUCH for your clear answer to my question.  This is exactly what I was looking for.  Unfortunately, this year I went ahead and filed without claiming the dividends because I was having difficulty getting an answer and would rather be safe than sorry later.  Can I file an amended tax return for this?  I can start putting that information together now for future tax returns too.  Again, I truly appreciate your answer.

[DianeW777]

Here is the answer to your question: Is the reinvestment of dividends considered "purchasing" after December 2011? 

• Yes, absolutely. One of two options is chosen when you own stock, you either receive the dividends in cash or your choose to have all dividends reinvested.  Any reinvested dividend is purchasing the same stock and it can be fractional shares.  In other words the dividend may not be enough to purchase a whole stock, but a fractional share in some cases. This is a necessary record keeping activity because an 'average cost basis' is not allowed under the tax law for stocks. 
• And Yes, if you owned the stock before December 31, 2011, then you have purchases from your reinvested dividends from then until the present (and ongoing).  If you have always had this with the same broker they may be able to give your your history.  If not, you will need to create it on your own whether or not you have accumulated records.
  • It's not difficult but is can be time consuming. There are websites that can give stock values on any day or year but you need to know the reinvested dividend dates for every period where that has taken place (usually quarterly).
• @MaggieMae11

[DiddlyD]

I would do more research as it doesn't look to me as though it is treated as capital gains but reported with as Dividend income received and then invested.  Here is the IRS rules on it. https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/stocks-options-splits-traders

[Rain_2011]

Re Arizona 140, TurboTax, doesn't the above include Qualified Dividends?  And if SO should it be labels:

"Capital Gain or Loss from Assets and Qualified Dividends Acquired after December 21, 2011?

[Rain_2011]

And does it include Qualified Dividends?? If so that should be in the title!! Confusing.

[Rain_2011]

At the bottom I do believe it read 'qualified dividends' also are treated as Capital Gains and get the discount....if SO it should be stated on TurboTax that way...Capital Gains or Loss from Assets and Qualified Dividends Acq after Dec 21 2011.   PERPLEXED!!

[DiddlyD]

More research I found this; fidelity.com/tax-information/tax-topics/qualified dividends.  This explains the "Qualified" tax treatment of these type dividends as capital gains.  You need to be careful with turbo tax because I know I didn't check the box "it was purchased after Dec 31, 2011 but I saw it on my AZ state and had to go back into Federal and un check the box and amend my tax return which I had already emailed.  Good luck!