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VOC Energy Trust Message Board

  • roncor roncor Mar 1, 2013 8:41 PM Flag

    Tax Treatment

    My broker put the entire 'dividend' as a royalty on the 1099. VOC provides a very complex discussion about how the distributions should be taxed. Does anyone understand it? Do I put the whole distribution down as royalties which =s ordinary income?

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    • The brokerage 1099s get revised several times for trusts like this. It usually starts out as dividend or royalty, then gets changed in a later revision. But they may not get it correct in the end.
      The tax booklet is the definitive treatment. You can call your broker, ask them to fix it, but I usually wait till they have done at least one revision of the 1099 before I bother.
      If they don't get it right in the end, do it the correct way and include a note with your tax return explaining the discrepancy.
      If you put the whole thing as royalty, you are cheating yourself because a significiant portion is return of capital (ie. tax deferred).

 
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