How can I use mutual fund short-term capital gains, which are reported on Form 1099-DIV in Box 1 as “Ordinary Dividends,” to help offset short-term capital losses?
You cannot. You did not sell the assets that produced this income, the mutual fund did. All income that is taxed as ordinary income flows through to you as ordinary dividends, whether the income is from interest, dividends, or the sales of short-term capital assets. In the same manner, you report capital gain distributions as long-term capital gains on your return regardless of how long you have owned the shares in the mutual fund. This is because the asset was held and then sold by, the mutual fund, not by you. Report your total ordinary dividends (including the short-term capital gains in your mutual fund) on Form 1040, line 9, or Form 1040A, line 9, with your other dividends, if any. You may also have to file Form 1040, Schedule B (PDF) , Interest & Dividend Income or Form 1040A, Schedule 1 (PDF), Interest and Ordinary Dividends. How do you list gains from mutual funds on Schedule D and Form 1040 when some mutual funds list short-term capital gains separately and others lump short-t
