Form 2439: Notice to Shareholder of Undistributed L Term Capital Gains

Form 2439– Notice to Shareholder of Undistributed Long-Term Capital Gains, is an official Internal Revenue Service (IRS) document used by Regulated Investment Companies (RICs) - including mutual funds and exchange-traded funds (ETFs) - and Real Estate Investment Trusts (REITs) to inform shareholders about undistributed capital gains.

Who Receives Form 2439?

Shareholders of record for a RIC or REIT that has chosen to retain some or all capital gains will receive Form 2439 from the investment company. This typically occurs in late December or early January, allowing shareholders to include the information on their tax returns for the previous year.

What Information Does Form 2439 Include?

Shareholder Information: The form will identify the shareholder by name, address, and taxpayer identification number (usually the last four digits of the Social Security number).

Undistributed Capital Gains: Box 1a of the form details the total amount of undistributed long-term capital gains attributable to each share.

Tax Paid by Investment Company: Box 2 of the form specifies the amount of tax the investment company paid on behalf of the shareholder for the undistributed capital gains.

Breakdown (Optional): In some cases, the form may provide a further breakdown of the capital gains by investment type (e.g., stock sales, real estate sales) in Boxes 1b, 1c, and 1d.

What Do I Do with Form 2439?

A. Tax Filing: Attach Form 2439 to your federal tax return when filing. This allows the IRS to know you're reporting the undistributed capital gains and claim a credit for the taxes the company already paid.

B. Reporting the Gains: Report the total undistributed capital gain amount (found in Box 1a of Form 2439) on the appropriate schedule in your tax return. The specific location depends on your filing status (e.g., Schedule D for individuals).

How Do I Report the Information on My Tax Return?

The total undistributed capital gain amount from Box 1a of Form 2439 should be reported as a long-term capital gain on the appropriate schedule of your tax return. The specific schedule may vary depending on your filing status. Consult a tax professional or refer to IRS instructions for details.

What About the Tax Credit?

The amount of tax paid by the investment company, shown in Box 2, can be claimed as a credit to offset your tax liability. There may be specific forms or sections on your tax return designated for claiming this credit.

Do I Need to Attach Form 2439 to My Tax Return?

While not mandatory, it's highly advisable to attach a copy of Form 2439 to your tax return for the IRS's reference and to support your claim for the tax credit.

What if I Didn't Receive Form 2439?

If you suspect you should have received a Form 2439 but haven't, contact your investment company directly. They can provide a copy or confirm if there were no undistributed capital gains for the year.