Nondividend Distribution Statements
Online · Written guide Content date 1 min read
A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. Typically it is a return of the capital or the investment that was made by the owner of the corporation or mutual fund.
Nondividend distributions are typically reported to the taxpayer-shareholder on Form 1099-DIV and they are typically not taxable, however once the taxpayer's basis in the corporation has been reduced to zero any subsequent nondividend distribution is considered a capital gain and is reported on Form 8949. It's up to the taxpayer to keep track of their basis in the corporation, reducing it by any nondividend distributions.
To enter a nondividend distribution, from the Federal Section of the tax return (Form 1040) select:
- Income
- Schedule B - Forms 1099-INT, DIV, OID
- Interest or Dividend Income
- Dividend Income, Form 1099-DIV
- Enter the Payer's Name (TIN and address are optional)
- Nondividend Distributions - Enter the amount.
To enter a nondividend distribution received beyond the taxpayer's basis, from the Main Menu of the tax return (Form 1040) select:
- Income
- Schedule D/Form 8949
-
Capital Gains Transaction
- Description of Property - Enter an appropriate description, e.g. nondividend distribution.
- Date Acquired - Enter the purchase date. If there are multiple dates, enter the most recent.
- Date Sold - Enter the date of the distribution.
- Sales Price - Enter the amount of the distribution.
- Select cost basis type - Choose Did not receive Form 1099-B.
- Cost - Leave blank.
Note: This is a guide on entering a nondividend distribution into Tax Processors Plus Online. It is not intended as tax advice.
Additional Information: