Capitial gain from mutual fund.

[hp100]

I have a mutual fund from Vanguard.  I got a consolidated 1099, entered all the info from 1099 div to TT.   Vanguard 1099 shows the details of capital gain distribution, where the long term capital gain is $10,000. I did not buy nor sell the mutual fund.  I think this LT gain should be taken care of in the TT.  How do I enter this LT capital gain in skedule D, where I do not have a base price since I did not sell nor buy in 2021.  TT looks like this treating as short term (normal income).

[JulieS]

Capital gains distributions are normally entered in box 2a of Form 1099-DIV and no additional input is required  in TurboTax. 

Long term capital gains distributions are taxed at the term gains rates. The amount will appear on line 7 of your 1040. 

[SteamTrain · Accepted solution]

LT Cap Gains distributions from Mutual Funds, and shown/entered in box 2a of the 1099-DIV also will automatically be transferred in the background, by the software to Line 13 in the schedule D before going to line 7 of the form 1040   (BUT, the Sched D may not be generated or used at all if your only reported gains are those 2a amounts, and have no other financial transactions requiring the Schedule D, or form 8949)

No basis is need for that since it is taken care of internally within the Mutual Fund's financial accounting following IRS rules in effect for how the Funds are required to report the gains.

[Critter-3]

Dividends and capital gains reported on a 1099-DIV from a mutual fund are taxable in the year they are distributed.   This is income that is passed thru from the mutual fund company from buys/sells the mutual fund did during the year.   You personally  did not sell the mutual fund stock so it is not reported as such on the sch D.   

[SteamTrain]

@hp100 I added a qualification about whether the Sched D is generated at all.....always some exception.

[Mike9241]

mutual funds create capital gains for their investors when it sells securities it holds. the gains are passed out to the investors on the 1099-DIV.   short-term gains under the federal tax laws are included as ordinary dividends. only the long-term gains are separately reported    

[oksanaohar]

If the only capital gain I have is a long-term gain from a mutual fund distribution reported on a 1099-div line 2a, how do I ensure it is taxed at the long term capital gain rate and not as ordinary income.  If it is my ONLY capital gain, how do I ensure schedule D is generated?

[DianeW777]

You will see the 'Qualified Dividends and Capital Gain Tax Worksheet' in your file.  If you are using TurboTax CD/Download you can see it in the Forms list. If you are using TurboTax Online you can print the return to view it in .pdf before you file.

• Qualified Dividends and Capital Gains Tax Worksheet
• Can I print before I file my return in TurboTax Online?