Very interesting and informative post all round.
<<It does not say anything about the timing of the reporting of your distributions by your broker. That is why it doesn't tell me whether the reporting by Waterhouse is correct.>>
I hadn�t previously considered that Waterhouse was not required to do anymore than what they�ve done�.just thought they were being bullheaded.
I think I should throw in the towel trying to get them to change the 1099. It is clear that the January distribution wasn�t included because I can make a direct comparison of the 1099 total to the monthly distributions on my annual Waterhouse statement.
This one issue has held me up from completing my taxes, and attempting to comply precisely is just not worth it anymore.
Thanks very much for your time and efforts.
SJT says that the income is REFLECTED in the checks. It doesn't say that the income IS the checks. There is a connection between the income and the distributions from a royalty, but not an equality in identity. In that respect the royalty trusts differ from corporations paying dividends, mutual funds, and REITs. The royalty trusts are more like publicly traded partnerships which have the same disconnect. The RTs and PTPs also have similar reporting on the tax return.
Since the income from a royalty trust is not necessarily the same as its distributions, the reported distributions at best only tell the IRS approximately what the royalty income is. The material which you quoted from SJT discusses the timing of the reporting of your income. I don't dispute what SJT says. It does not say anything about the timing of the reporting of your distributions by your broker. That is why it doesn't tell me whether the reporting by Waterhouse is correct.
Because the royalty distributions reported on a 1099-MISC may not be the same as the reportable royalty income, it is not a necessity that they be reported on an exactly matching basis. I agree that there would be some logic and consistency in reporting the January distribution on the 1099-MISC for the proceeding year. That applies especially for someone who sold his units early in January so that he did not have any taxable income for the year. If the January distribution is not thrown back to the preceding year, the 1099-MISC for the year of sale would report royalty distributions even though there wasn't any royalty income.
Despite the apparent logic to reporting the January distribution from a royalty trust for the preceding year, I don't know if that is what the brokers are actually supposed to do. Can you find a broker which does report the January distribution for the preceding year? Can you find any statements from the IRS about the reporting? I know of IRS statements about the January dividends of mutual funds and REITs. I searched the IRS website for the term "royalty trust" and didn't get any hits.
My broker reported my income on a 1099-Misc.
SJT directly provided a workbook for calculating depletion, etc.; and to assist in completing tax forms. If you haven�t received a booklet, the telephone number is 866-809-4553�.probably better to go to their web site first, though:
I am still battling with my broker for under reporting my distributions. The distribution paid in January should be included in 2002 income. It counts as income in the year that it is received by the trustee, not when you receive it. BTW, my broker is Waterhouse. Hope you have better luck with your broker.
Ridi & everybody, you guys are the best.
Thank you SO MUCH for posting that link. I was gnashing my teeth over taxes, didn't get the booklet this year, and had a dead link to an old web site that didn't work. Then I pop in here and you have the info.
May that good turn be rewarded in some way very soon!
SJT does a nice job explaining what to do with their K-1 info - years ago, different stock, but same broker (Waterhouse) I gave up and reported everything as ordinary dividends. I had assumed that using the broker supplied 1099 over-stated the taxable income, and while it might not be correct, it was way easier and doesn't generate fines or interest, and is less likely to trigger a hit with the feds when they compare 1040 to broker-supplied info. You do loose a little income that mightbe sheltered.
Exactly where on your tax return are you planning to report the amount of your distributions from SJT? Since that is not one of the numbers which you have to report, what difference does it make what number the broker reports for your distributions?
Thanks, I have had RT's in the past not this one. I have been looking at SJT, but the damn taxes are such pain I was looking to see how it went for others before buying.
Check Smart money web site under taxes. They note that K-1's are an area that the IRS is looking for underreporting. Basically they note in the past K-1's got a pass. ( Looks like too difficult for the IRS !!!!!!) And seems like they will be looking for underreporting.
SJT looks like a good investment and worth the tax headachs. Hate to make a decision based on tax complications. Yet I would not have so many shares I would be in fat city.
Good luck in your situation. How did the k-1 report the January distribution? I think that is how the IRS will look at it.