Understanding Form 1099-DIV: Dividends and Distributions

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  1. Ordinary Dividends
    Box 1a reports taxable dividends and short-term capital gain distributions. Short-term capital gain distributions are reported in this box as they are included in ordinary income for tax purposes.
  2. Qualified Dividends
    Box 1b reports the amount of dividends that may be taxed at a maximum rate of 15% assuming that the 61 day holding period requirement is met. The shareholder is responsible for determining if the holding period was met and for adjusting the amount accordingly. Refer to your December 31st statement to determine the holding period. Please see the instructions for IRS Form 1040 for more information.
  3. Total Capital Gain Distributions
    Box 2a reports the total long term capital gains.
  4. Unrecaptured Section 1250 Gain
    Box 2b reports section 1250 gain of certain depreciable real property. Ivy Real Estate Securities Fund invests in real estate investment trusts (REITS). The amounts in this box will report the reclassified tax character of the distributions.
  5. Collectibles (28%) Gain
    Box 2d reports the 28% rate gain from the sale or exchange of collectibles. The amounts in this box will report the reclassified amounts of long term capital gains associated with the sale of precious metals including gold.
  6. Nondividend Distribution
    Box 3 reports a nontaxable distribution due to a return of capital distribution.
  7. Federal Income Tax Withheld
    Box 4 reports the amount withheld from any dividend or capital gain distribution. This amount is a prepayment of federal income tax.
  8. Foreign Tax Paid
    Box 6 reports foreign tax paid on foreign investments. This amount can be claimed as an itemized deduction, or used to obtain a foreign tax credit.

Important information for all investors in the Ivy European Opportunities Fund, Ivy International Core Equity Fund & Ivy Managed International Opportunities Fund.

The funds paid a distribution in excess of the current and accumulated earnings and profits. These types of distributions are called a Return of Capital, which are generally nontaxable and reported in box 3 of Form 1099-DIV. You must reduce your cost (or other basis) by this amount for figuring gain or loss when you sell your shares. If you receive back all your cost (or other basis) you must report future nontaxable distributions as capital gains.

For further information on Return of Capital, please refer to IRS Publication 550, Investment Income and Expenses, or consult your tax advisor.

Frequently Asked Questions

Q. Why did I receive a 1099-DIV on my account?
A. Mutual funds are required to pay distributions of income and realized gains each year. Distributions are taxable to the shareholder even if the distribution is reinvested in the account.

You will not receive a 1099-DIV if:

  • The account is a tax deferred account such as an IRA Account
  • All distributions in the account are tax-exempt
  • The fund did not pay any distributions

Q. Why are the amounts on my 1099-DIV different than on my Year End Statement?
A. The funds may have had a reclassification of the income and/or realized gains after the distributions were paid for the year.

Q. Why did I receive a 1099-DIV for my tax exempt fund(s)?
A. The tax exempt funds are allowed to invest in taxable securities as outlined in the prospectus. If the tax exempt funds pay distributions with portions of income and/or realized gains that are taxable, the amounts will be reported on your 1099-DIV. The distributions of income and/or realized gains that are free from federal income tax will be reported on your 1099-INT.

Q. Why did my 1099-DIV reflect amounts in Foreign Tax Paid?
A. The foreign tax paid is a credit that is intended to relieve U.S. taxpayers of dual taxation when the foreign source income is taxed by both the United States and by the foreign country. The foreign tax paid may be taken as a foreign tax credit or an itemized deduction. If foreign taxes total less than $300 ($600 if married filing jointly) and if all reported foreign tax is reported on 1099 Forms, you are exempt from the foreign tax credit limitation rules and the credit may be claimed on Form 1040. If not, you must file Form 1116 to claim the credit. To elect the deduction you must itemize deductions on Schedule A, Form 1040. To claim the credit the shares must have been held for at least 16 days. Please consult your tax advisor to determine which option to elect.

Due to changes in the foreign credit provision of the IRS tax law, shareholders generally no longer need the country-by-country information. (An election is available to claim the aggregate foreign tax amount as a credit.)

Important information for all investors in the Ivy Real Estate Securities Fund
The Ivy Real Estate Securities Fund will not mail 2009 tax form statements (1099-DIV and 1099-B) until February 2010. Ivy Real Estate Securities Fund invests predominately in real estate investment trusts (REITS), as defined under Internal Revenue Code Section 856. Although Ivy Real Estate Securities Fund will identify the total amount of distributions received from the REITs during tax year 2009, the fund cannot identify the tax character of these distributions until at least February 15, 2010, when the form 1099 information is received from the REITs in which the fund is invested.

Shareholders can expect to receive tax statements for this fund in late February. Each year Ivy Real Estate Securities Fund obtains an extension of the mail date from the Internal Revenue Service.