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Qualified dividends. This is a hypothetical involving buying a stock in a taxable brokerage account. Refer to the additional details for the full question.

Say you purchase XYZ stock on December 1st and you receive a dividend on the 15th of December. Fast forward to when you receive your 1099-Div on January 31st  of the following and it is reported that the dividend is not considered a qualified dividend. However you continue to hold onto the stock for 60 days after you bought it thus sometime in February it should then become a qualified dividend (once the holding period is satisfied). At that point are you re-issued a 1099-Div or because as of December 31st it considered non-qualified can you not get qualified status. Also provided it is considered a qualified dividend to whose prerogative is it to let you know (i.e. is it up to your brokerage firm to inform you or would you need to contact the stocks transfer agent)? Thanks for the help in advance!

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Qualified dividends. This is a hypothetical involving buying a stock in a taxable brokerage account. Refer to the additional details for the full question.

you won't get another 1099-DIV to update your dividends status.
It's up to you to track this.

In your example, your dividend is a qualified dividend, since you held the stock through the requisite time period.

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4 Replies

Qualified dividends. This is a hypothetical involving buying a stock in a taxable brokerage account. Refer to the additional details for the full question.

you won't get another 1099-DIV to update your dividends status.
It's up to you to track this.

In your example, your dividend is a qualified dividend, since you held the stock through the requisite time period.

MinhT
Expert Alumni

Qualified dividends. This is a hypothetical involving buying a stock in a taxable brokerage account. Refer to the additional details for the full question.

The rules for dividends to be treated as qualified dividends are:

For common stock, a share must be held more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. Under IRS guidelines, the ex-dividend date is the date after the dividend has been paid and processed and any new buyers would be eligible for future dividends. For preferred stock, the holding period is more than 90 days during the 181-day period beginning 90 days before the stock’s ex-dividend date.

The test is by comparison with the ex-dividend date which is fixed. At the time the dividend is paid, the dividend is qualified or non-qualified for each shareholder depending on his holding period. A non-qualified dividend does not become a qualified dividend with the passage of time.


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Qualified dividends. This is a hypothetical involving buying a stock in a taxable brokerage account. Refer to the additional details for the full question.

With the reporting of the 1099-Div coming out on January 31st the entire holding period cannot be observed with the dates, thus at this point it would fail the test (it would not have been held for 60 days but it cannot be known yet if it will be held for 60 days). BUT after the 1099 is issued and taking into consideration the entire holding period it would then become qualified. Do they then re-issue another 1099?

Qualified dividends. This is a hypothetical involving buying a stock in a taxable brokerage account. Refer to the additional details for the full question.

In the hypothetical example of the OP, the 1099-DIV shows a non-qualified dividend.
I don't think this would happen; you would receive a 1099-DIV that shows a qualified dividend.
In other words, dividends that could be qualified are presumed qualified.
It is up to the taxpayer to disqualify his own dividends on the tax return.

Note: never experienced this situation personally (that I can recall), so I can't say with absolute 100% certainty.

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