Be sure to click the box 'My form has info in more than just these boxes...' if necessary, when you do your 1099-DIV entry.
When an investment makes a distribution of its earnings to you and reports it in box 2a of Form 1099-DIV, the IRS generally allows you to treat the distribution like a long-term capital gain. This is beneficial since the same tax rules that apply to your qualified dividends also apply to qualified capital gain distributions, regardless of whether you hold the investment for 10 days or 10 years.
Section 897 gain. If a RIC described in section 897(h)(4) (A)(ii) or a REIT disposes of a USRPI at a gain, any distributions made to the extent attributable to such gain shall be treated as gain recognized by the recipient from the disposition of a USRPI (that is, the look-through rule).
If any part of the ordinary dividend reported in box 1a or capital gain distributions reported in box 2a is attributable to section 897 gains, report that gain in box 2e and box 2f, respectively. See section 897 for the definition of USRPI and the exceptions to the look-through rule.
Note. Only RICs and REITs should complete boxes 2e and 2f. Boxes 2e and 2f do not need to be completed for recipients that are U.S. individuals.
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