What sources should a fund rely upon for historical tax characterizations of distributions and related tax adjustments, e.g., foreign tax credits? How should a fund determine the historical tax characterizations of distributions if these sources are unavailable?
A. As a general rule, a fund should rely on tax information reported to fund shareholders on IRS Form 1099-DIV and, in the case of tax-exempt distributions, amounts reported for tax purposes to investors on shareholder statements. For periods prior to the compliance date for the after-tax return requirements, a fund may not be able to obtain the entire Form 1099-DIV history for all or a portion of the fund’s existence, such as where a fund has been acquired by an unaffiliated adviser. In these cases, a fund should use reasonable efforts to fill any gaps in the tax history for a fund. It is advisable for funds to retain written explanations describing these efforts.
Related Questions
- What sources should a fund rely upon for historical tax characterizations of distributions and related tax adjustments, e.g., foreign tax credits? How should a fund determine the historical tax characterizations of distributions if these sources are unavailable?
- What sources should a third party rely upon for historical tax characterizations of distributions in computing standardized after-tax return for a fund?
- What is the historical tax treatment for the cash distributions?
