Dividends

Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation.
These distributions are, at least in part, one form of a return of capital.
They may be paid in one or more installments.
You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9
When a liquidating dividend occurs, it is considered to be a return of capital and not profit.
If the distribution is more than your basis, you would have to report the difference as a capital gain. If the distribution is less than your basis, you may be able to claim a capital loss.

Certain distributions commonly referred to as dividends are actually interest. They include "dividends" on deposits or share accounts in credit unions, cooperative banks, domestic savings and loan associations, and mutual savings banks. Report interest income on IRS Form 1040, line 8a If your taxable interest income is more than $1,500, show that income on IRS Schedule B

Mutual fund dividends declared at the end of the year in the months of October through December and paid the following January are taxable in the year declared.

The amount listed on Form 1099-DIV box 5 for fund expenses is deductible as an miscellaneous itemized deduction subject to the 2% AGI limitation on IRS Schedule A.

The amount listed on Form 1099-DIV box 6 for foreign taxes are deductible on tax credit Form 1116 or as an itemized deduction, other tax amount on IRS Schedule A.

In order to avoid any future problems and to avoid any mismatching reports with the IRS, you should include this amount on IRS Schedule B, both as a positive and negative amount. Enter the Form 1099-DIV amount on Schedule B, line 5 as income. Enter the same amount as a negative adjustment on Schedule B, line 5 and enter "Nominee Distribution" as the negative adjustment description. Speak to your local CPA if you have any questions about the reporting of this incorrect dividend income.

No. The conversion to common stock is not a taxable event. The cost basis of the converted common stock is the original cost basis of the converted bond.

Yes. Dividend reinvestment plans let you use dividends to buy more shares of stock in a corporation instead of receiving the dividends in cash. If you are a member of this type of plan and use dividends to buy more stock at a price equal to its fair market value, you must report the dividend as income on IRS Schedule B.