"Ira Smilovitz" <iras1[at]aol.com> writes:

- quote -

Also, some MMFs can have cap gain distributions. Fidelity's
MA AMT Tax-Free MMF has had (very small) cap gain distributions
(at least) two years running.

--
Rich Carreiro rlc-news[at]rlcarr.com

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Barry Margolin" <barmar[at]alum.mit.edu> wrote in message
news:barmar-74CE8D.17523909032008[at]newsgroups.comcast.net...
- quote -

Never say never. Money markets can generate capital gains, but it is
exceedingly rare. There have been occasions where some money market share
values have varied from $1.00.

Ira Smilovitz

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 9, 2:52 pm, Barry Margolin <bar...[at]alum.mit.edu> wrote:
- quote -

Thanks. Digging deeper I've discovered this is something called a
Money Market Fund -- a mutual fund that invests in money markets. So
that resolves my confusion about whether it's a money market or a
fund. According to Pub. 564 it should be reported as a dividend, not
as interest. I'm still not clear on whether it is a qualified
dividend or an ordinary dividend, but I suspect the tax consequences
will be immeasurable anyway.

Damian

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article
<bf1432c6-e560-4c0d-8316-e8983dd740e7[at]s12g2000prg.googlegroups.com> ,
Damian Menscher <menscher[at]gmail.com> wrote:

- quote -

Money market accounts never generate capital gains -- the price of a
share is always $1. So this would be either interest or dividends, and
they're taxed identically.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I have a small amount of money in a paypal account, and they put it
into a money market. So now I've got a couple bucks of income to
report. Since it's under $10, they didn't provide me with a 1099, so
I'm on my own to figure out how to report this. And I'm quite
confused.

Normally I'd expect this to be reported as interest. But looking at
my account history, I see they call this a "dividend" from the PayPal
Money Market. And digging further, their prospectus [1] says
dividends will be reported on a 1099-DIV which will distinguish
between dividends that must be treated as ordinary income and which
(if any) are long-term capital gain. So, assuming I don't care about
paying the higher tax rate on a dollar of income, it would seem this
should be reported on Sch. B as ordinary dividends, or possibly on
Sch. D as a capital gain distribution.

But looking to see what the difference is for something to be a
"qualified" dividend, I found Pub. 550, which says dividends paid on
deposits with a financial institution whould be reported as interest
income.

So, what am I supposed to do? Do I report this as interest, ordinary
dividend, qualified dividend, or a capital gain distribution? Or not
at all, since it's under the $10 minimum to generate a 1099?

Damian

[1] https://www.paypal.com/en_US/pdf/PayPal_Prospectus.pdf

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >