1. Home
  2. Taxes General Forum
  3. Noticed something odd with Ameritrade's handling of Return of Capital (VNQ)

Noticed something odd with Ameritrade's handling of Return of Capital (VNQ)

I noticed something odd with Ameritrade's handling with my holding of VNQ (in my non-retirement account).

On Vanguard's website, they do show return of capital in 2014.

Looking at my 1099 from Ameritrade for year 2014, they show all those aforementioned ROC amounts reported as dividends (either qualified or nonqualfied); therefore it appears I paid the tax on the Return of Capital instead of deferring it like it should?

Luckily my holding is note a huge amount (nor is the dividend), so paying the tax early does not hurt my pocket book.... but what gives? Is this something that Ameritrade does since I bought the VNQ fund through them, as opposed to buying directly through a Vanguard account?

Lastly, in this case, when I sell VNQ, I don't need to adjust my cost basis, correct?

Reply to
martin lynch
Loading thread data ...

Contact TDAmeritrade and ask them why they reported as they did. VNQ is a REIT fund so there should have been some return of capital. I would expect that TDA will issue a corrected 1099.

Yes, you do have to adjust your cost basis for the return of capital. It is always your responsibility to maintain correct records regardless of what the broker reports.

Ira Smilovitz

Reply to
ira smilovitz

Here is my guess. The brokerage houses show all dividends as "dividends" throughout the year, and then update their records after the end of the year to reflect the information then available from the fund, REIT, etc. But they must get their 1099s out, so they send them out showing everything as a "dividend". Then, when they get the better data, they send out a corrected

1099. Then, all the customers are caught flat footed and p.o.'d, having to kiss it off or file an amended return.

But if you know the correct numbers before a corrected 1099 is issued (or even if one never is issued), use the correct numbers on your tax return, and save the documentation in case needed.

Reply to
taxed and spent

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.