Calculating the basis for shares of international stock mutual fund

Question

I'm calculating the basis in connection with redeeming shares of an international stock mutual fund.  The fund has paid dividends quarterly, which I reinvested.  I'm reviewing the Federal 1099-DIV forms for each year I have owned the fund. In box 1a, the stated dividends include the actual dividends PLUS the foreign tax paid.

Question: In calculating the basis, do I use (a) only the actual dividends or (b) the dividends listed in box 1a of 1099-DIV, which adds in the foreign tax credit?
[Of course, I take the foreign tax credit on Form 1040, line 47 in 2017.]

S Spring · Answer

You might be saying that the dividend received is positive, the foreign taxes paid are negative, and the two items are added, or netted, together.

However, line 1a of the 1099-DIV is "Total Ordinary Dividends" while line 6 is "Foreign Tax Paid". The two items are separate.

A stock broker account will often charge a fee for a dividend paid from an ADR. That fee is the only thing that might be subtracted from the dividend.

Line 1b of the 1099-DIV is "Qualified Dividends" but that is just concerns a U.S. tax discount on dividends.

Calculating the basis for shares of international stock mutual fund

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