If you make a payment that may be a dividend but you are unable to determine whether any part of the payment is a dividend by the time you must file Form 1099-DIV, the entire payment must be reported as a dividend. See regulations under section 6042 for a definition of dividends.

You are not required to report on Form 1099-DIV the following:

Except as provided below, qualified dividends are dividends paid during the tax year from domestic corporations and qualified foreign corporations. For individuals, estates, and trusts, qualified dividends are taxed at a maximum rate of 15% (generally, 5% for individuals whose other income is taxed at the 10% or 15% rate).

Qualified foreign corporation.   A foreign corporation is a qualified foreign corporation if it is:

1. Incorporated in a possession of the United States or

2. Eligible for benefits of a comprehensive income tax treaty with the United States that the Secretary determines is satisfactory for this purpose and that includes an exchange of information program.

  

For a list of income tax treaties of the United States that (a) are comprehensive, (b) include an information exchange program, and (c) have been determined by the Treasury Department to be satisfactory for this purpose, see Notice 2003-69, which is on page 851 of Internal Revenue Bulletin 2003-42 at www.irs.gov/pub/irs-irbs/irb03-42.pdf.

  If the foreign corporation does not meet either 1 or 2 above, then it may be treated as a qualified foreign corporation for any dividend paid by the corporation if the stock associated with the dividend paid is readily tradable on an established securities market in the United States. See Notice 2003-71, which is on page 922 of Internal Revenue Bulletin 2003-43 at www.irs.gov/pub/irs-irbs/irb03-43.pdf, for more information on when a stock may be considered to be readily tradable. For additional requirements that must be met, see Notice 2006-3 available on page 306 of Internal Revenue Bulletin 2006-3 at www.irs.gov/pub/irs-irbs/irb06-03.pdf.

  

For guidance on the extent to which distributions, inclusions, and other amounts received by, or included in the income of, individual shareholders as ordinary income from foreign corporations subject to certain anti-deferral regimes may be treated as qualified dividends, see Notice 2004-70, which is on page 724 of Internal Revenue Bulletin 2004-44 at www.irs.gov/pub/irs-irbs/irb04-44.pdf.

Report as ordinary dividends in box 1a of Form 1099-DIV dividends distributed under section 404(k) on stock held by an employee stock ownership plan (ESOP) or a tax credit ESOP. If a section 404(k) distribution is made in the same year as a total distribution from the ESOP, you may report the entire amount on Form 1099-R or you may report the dividends on Form 1099-DIV and the remaining amount on Form 1099-R.

For information about reporting dividends on restricted stock, see Rev. Procs. 80-11, 1980-1 C.B. 616, and 83-38, 1983-1 C.B. 773, and Rev. Rul. 83-22, 1983-1 C.B. 17.

If you are required to file Form 1099-DIV, you must provide a statement to the recipient. For information about the requirement to furnish an official or acceptable substitute Form 1099-DIV to recipients in person, by statement mailing, or electronically, see part M in the 2006 General Instructions for Forms 1099, 1098, 5498, and W-2G.

You may enter an “X” in this box if you were notified by the IRS twice within 3 calendar years that the payee provided an incorrect taxpayer identification number (TIN). If you mark this box, the IRS will not send you any further notices about this account. However, if you received both IRS notices in the same year, or if you received them in different years but they both related to information returns filed for the same year, do not check the box at this time. For purposes of the two notices in 3-year rule, you are considered to have received one notice. You are not required to send a second “B” notice to the taxpayer on receipt of the second notice. See Backup Withholding in the 2006 General Instructions for Forms 1099, 1098, 5498, and W-2G for more information.

The account number is required if you have multiple accounts for a recipient for whom you are filing more than one Form 1099-DIV. Additionally, the IRS encourages you to designate an account number for all Forms 1099-DIV that you file. See part L in the 2006 General Instructions for Forms 1099, 1098, 5498, and W-2G.

Enter dividends, including dividends from money market funds, net short-term capital gains from mutual funds, and other distributions on stock. Include reinvested dividends and section 404(k) dividends. Include as a dividend the amount of the recipient's share of investment expenses that you report in
box 5.

Enter the portion of the dividends in box 1a that qualify for the 5% and 15% capital gains rates. Include dividends for which it is impractical to determine if the section 1(h)(11)(B)(iii) holding period requirement has been met. See Qualified Dividends on page DIV-1.

You must report a dividend paid by a foreign corporation according to the guidance provided in Notice 2003-79 and Notice 2004-71 which contain the rules for reporting the dividend for tax years 2003 and 2004. These rules are extended for 2005 and subsequent tax years by Notice 2006-3. Notice 2003-79 is available on page 1206 of Internal Revenue Bulletin 2003-50 at www.irs.gov/pub/irs-irbs/irb03-50.pdf. Notice 2004-71 is on page 793 of Internal Revenue Bulletin 2004-45 at www.irs.gov/pub/irs-irbs/irb04-45.pdf.

Enter total capital gain distributions (long-term). Include all amounts shown in boxes 2b, 2c, and 2d.

Enter any amount included in box 2a that is an unrecaptured section 1250 gain from certain depreciable real property.

Enter any amount included in box 2a that is a section 1202 gain from certain qualified small business stock. See Qualified small business stock—RICs on page DIV-2.

Enter any amount included in box 2a that is a 28% rate gain from sales or exchanges of collectibles.

Enter nondividend distributions, if determinable.

Enter backup withholding. For example, if a recipient does not furnish its TIN to you in the manner required, you must backup withhold at a 28% rate on certain dividend payments reported on this form. Use Form W-9, Request for Taxpayer Identification Number and Certification, to request the TIN of the recipient. For foreign recipients, use the applicable Form W-8. See part J in the 2006 General Instructions for Forms 1099, 1098, 5498, and W-2G.

Enter the recipient's pro rata share of certain amounts deductible by a nonpublicly offered RIC in computing its taxable income. This amount is includible in the recipient's gross income under section 67(c) and must also be included in box 1a. Do not include any investment expenses in box 1b.

Enter any foreign tax withheld and paid on dividends and other distributions on stock. A RIC must report only the amount it elects to pass through to the recipient. Report this amount in U.S. dollars.

Enter the name of the foreign country or U.S. possession to which the withheld tax applies.

Enter cash distributed as part of a liquidation.

Enter noncash distributions made as part of a liquidation. Show the fair market value as of the date of distribution.