Question

What is the federal tax treatment of capital gain distributions reported on Form 1099-DIV, Dividends and Distributions?

Capital gain distributions are:
Always tax-exempt.
Taxed as ordinary income.
Treated as long-term capital gains.
Treated as short-term capital gains.

Answer 1

Capital gain distributions reported on Form 1099-DIV are treated as long-term capital gains, regardless of how long you held the shares in the mutual fund or other investment vehicle that generated the distributions. This treatment applies even if the actual shares were held for less than a year. Therefore, the correct answer is:

**Treated as long-term capital gains.**