Capital Gains Distributions

Some clients will receive a 1099-DIV from their brokerage account, and there are capital gains distributions listed in line 2a. Rather than dividend income, the IRS considers capital gain distributions as long-term capital gains, no matter how long the taxpayer has owned shares in the mutual fund. 

Capital gains distributions from mutual funds are reported on line 13 of Schedule D, and are lumped into net long-term capital gains/losses on line 15, regardless of how long the taxpayer owned the mutual fund shares. 

Enter any capital gains distributions in the Long-Term Capital Gains and Losses Worksheet. To access that worksheet, click on the pencil icon next to Long-Term Capital Gains in the Schedule D Income section of Scenario Analysis.


Then, enter those capital gains distributions in the Capital Gain Fund Distributions line, highlighted below. In this example, $12,500 of capital gains distributions were included in the total long-term capital gains.