My 2014 1099 from my broker pulls forward dividends I received in 2015 and makes those subject to income tax in 2014.

I always thought I would be based on when I actually got paid the dividend and not the the ex-dividend date which were in December 2014.

Am I wrong? It is always based on the ex-dividend date instead?

(http://www.autoadmit.com/thread.php?thread_id=2836582&forum_id=2#27538156)

http://ibkb.interactivebrokers.com/node/911

(http://www.autoadmit.com/thread.php?thread_id=2836582&forum_id=2#27540249)

"Schedule A—Deduction

for Dividends Paid

Lines 1 through 5. Section 561 (taking

into account sections 857(b)(8), 857(d)(3)

(B), and 858(a)) determines the deduction

for dividends paid.

Line 3. Dividends declared in October,

November, or December and payable to

shareholders of record in October,

November, or December are treated by

the REIT as paid on December 31 of that

calendar year. The REIT is then eligible for

the deduction for dividends paid for the

year the dividends are declared even

though they are not actually paid until

January of the following calendar year."

http://www.irs.gov/pub/irs-pdf/i1120rei.pdf

(http://www.autoadmit.com/thread.php?thread_id=2836582&forum_id=2#27540509)

I still think I would argue the same point though. This isn't really a tax rule designed to encourage investment in real estate through REITs because if the money were invested directly in real estate (in a world without REITs) then the cash basis taxpayer would receive the income in 2015 instead of 2014 and wouldn't owe 2014 taxes on it (I realize this is a weak spot, arguably it should be 2014 income because it was earned in 2014 so if cash basis tax payer earned it in 2014 they would pay 2014 taxes). Other rules related to taxation of REITs are designed to encourage people to invest in them. But this isn't a tax rule designed to facilitate investment necessarily, it's more of a rule designed to make the REIT work AFTER REITs are already existence, because as you said, otherwise every REIT would book in January.

My point is this: I think you may have bought their line. I think this could be a rule pushed by the banks, accountants, lawyers who are paid to facilitate REITs. Like you said, the REIT isn't a taxpayer and these folks get their fees regardless. But because they don't know the earnings, if every REIT waited until the next year to book, the REIT structure would possibly be repealed by Congress or Treasury because it was so obviously tax avoidance. By throwing the individual REIT owners under the bus (they're paying 2014 taxes on income they don't receive until 2015) you ensure the continued viability of the structure itself. I know a lot of corporate attorneys who work in REITs and other partnerships who would be very pissed if the corporate income tax were greatly reduced by some integration method, for example making dividends deductible. If public companies are essentially taxed as passthroughs, then all the knowledge they have about REITs is worthless.

(http://www.autoadmit.com/thread.php?thread_id=2836582&forum_id=2#27546204)

Wut?

"(I realize this is a weak spot, arguably it should be 2014 income because it was earned in 2014 so if cash basis tax payer earned it in 2014 they would pay 2014 taxes)"

"weak spot"? "arguably"? Kind of understating things.

If the REIT didn't exist - if you owned a bunch of office buildings outright - there wouldn't be any question as to when you would recognize the income you received in the last quarter of 2014. You would recognize it in 2014.

(http://www.autoadmit.com/thread.php?thread_id=2836582&forum_id=2#27546309)