IRS Simplifies Shareholder Reporting of Capital Gains

Washington, DC, June 29, 1999 - Changes made by the Taxpayer Relief Act of 1997 to the rules for taxing capital gains resulted in new capital gains reporting requirements for those mutual fund shareholders whose only capital gain income was from mutual fund capital gain dividends reported on IRS Forms 1099-DIV. Specifically, the Federal income tax returns for both 1997 and 1998 required that all taxpayers with capital gains complete the 54-line Schedule D. Previously, any mutual fund shareholder whose only capital gains were capital gain dividends could report those gains on line 13 of Form 1040 without any requirement to complete Schedule D.

Form 1040 for 1999 on the IRS website appears to take a significant step toward simplifying capital gains tax reporting for mutual fund shareholders. Specifically, the draft Form 1040 provides a box that can be checked by those mutual fund shareholders whose only capital gains are from capital gain dividends (no portion of which is taxable at a maximum rate in excess of 20 percent). For 1999, these taxpayers will be able to check the box and report their gains on Form 1040 without completing Schedule D, just as they did prior to 1997.