Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

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mbres60
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Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by mbres60 » Mon Feb 11, 2019 8:56 am

Our brokerage tax documents that include the 1099-Div has the remark "Dividends-Foreign Corporations", which refers to dividends from Carnival Corp. This is the only individual stock we own. Everything else is mutual funds. We don't know what this statement means for tax purposes. A call to Vanguard was only able to illicit the fact that there is a place on the 1040 where it is pertinent. We have no foreign accounts of any kind. We understand that these dividends are reported along with all our other dividends from the mutual funds on Schedule B and the pertinent line on the 1040. We are at a loss at the significance of the "foreign" reference. Is there more that we need to do? Can anyone shed light on this?

Thanks.

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HueyLD
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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by HueyLD » Mon Feb 11, 2019 9:08 am

Look through every page and do you see any foreign tax paid?

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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by RickBoglehead » Mon Feb 11, 2019 9:14 am

Carnival Corp was incorporated in Panama in 1972. Cruise companies both incorporate and flag their vessels outside the U.S. for both tax and safety rules reasons - they can have much less safe boats outside the U.S.

Since you own stock in a foreign company, you have to indicate that on your taxes. You likely paid foreign tax on the holding, and you'll be able to deduct that.
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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by livesoft » Mon Feb 11, 2019 9:19 am

RickBoglehead wrote:
Mon Feb 11, 2019 9:14 am
Since you own stock in a foreign company, you have to indicate that on your taxes.
Where would one indicate that on their tax return? I think that is the underlying question of the OP.
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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by mbres60 » Mon Feb 11, 2019 9:38 am

Thanks for the info.

We paid no foreign tax. (Many years ago when we owned a different mutual fund we did have foreign taxes and did claim the foreign tax credit, so we are aware of that provision.)

Livesoft - You got to the heart of the question. The questions in Part III of Schedule B ask about foreign accounts and trusts but merely getting dividends from Carnival is not having an interest in a foreign account. Where else would one specifically address dividends from foreign corporations, as opposed to simply including them with all our other dividends and cap gains distributions?

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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by RickBoglehead » Mon Feb 11, 2019 9:38 am

livesoft wrote:
Mon Feb 11, 2019 9:19 am
RickBoglehead wrote:
Mon Feb 11, 2019 9:14 am
Since you own stock in a foreign company, you have to indicate that on your taxes.
Where would one indicate that on their tax return? I think that is the underlying question of the OP.
If someone owns a foreign stock and has paid foreign taxes (and is now going to pay US taxes also), they get a foreign tax credit on form 1116. I use TurboTax so I just fill in my 1099 with the foreign tax paid, and later on TT asks the country of taxation, to which I answer RIC for mutual funds.

OP's statement should indicate if they paid foreign tax.

OP can choose to do nothing and give up the tax credit also.

So given the OP's response that they paid no foreign tax, and the foreign asset is held in a US brokerage account, they have nothing to do.
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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by livesoft » Mon Feb 11, 2019 9:40 am

Carnival stock is not a RIC.

I thought you might mention Form 1040 Schedule B Part III.
Last edited by livesoft on Mon Feb 11, 2019 9:42 am, edited 1 time in total.
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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by RickBoglehead » Mon Feb 11, 2019 9:41 am

livesoft wrote:
Mon Feb 11, 2019 9:40 am
Carnival stock is not a RIC.
Who said it was?
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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by livesoft » Mon Feb 11, 2019 9:51 am

Generally, a company that issues stock will have a web page and on that web page will often be an Investor Relations link along with all kinds of information. Here is one question answered at the CCL web site:
http://www.carnivalcorp.com/phoenix.zht ... -faq#31421

I don't know if the link is helpful. But it makes me ask the question: Did the Vanguard 1099-DIV show the dividend as 100% qualified? (Box 1a = Box 1b)

Also it is interesting to note that CCL is included in the S&P500 index.
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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by mbres60 » Mon Feb 11, 2019 10:26 am

Thank you all. All the Carnival dividends are correctly shown as qualified dividends and we know exactly how to deal with those on the 1040. We did not pay any foreign tax so therefore do not need form 1116. Our original question was only to determine whether there was some other place where we needed to note that there were foreign dividends. And as RickBoglehead explained, since we did not pay any foreign tax, it appears we do not need to do anything else.

BTW - what is RIC?

Yes, it is interesting that Carnival Corp is in the S&P 500!

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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by RickBoglehead » Mon Feb 11, 2019 10:29 am

mbres60 wrote:
Mon Feb 11, 2019 10:26 am
Thank you all. All the Carnival dividends are correctly shown as qualified dividends and we know exactly how to deal with those on the 1040. We did not pay any foreign tax so therefore do not need form 1116. Our original question was only to determine whether there was some other place where we needed to note that there were foreign dividends. And as RickBoglehead explained, since we did not pay any foreign tax, it appears we do not need to do anything else.

BTW - what is RIC?

Yes, it is interesting that Carnival Corp is in the S&P 500!
RICkboglehead... :D

Regulated Investment Company, aka Mutual Fund or brokerage.

If you use TurboTax, it tells you to put that in for a mutual fund or brokerage company.
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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by mbres60 » Mon Feb 11, 2019 10:37 am

Thanks.... sorry about the "misspelling" ;)

We do the taxes on paper and pencil and then use the free fillable online.

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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by talzara » Mon Feb 11, 2019 12:38 pm

mbres60 wrote:
Mon Feb 11, 2019 8:56 am
Our brokerage tax documents that include the 1099-Div has the remark "Dividends-Foreign Corporations", which refers to dividends from Carnival Corp. This is the only individual stock we own. Everything else is mutual funds. We don't know what this statement means for tax purposes.
Since you're not filing form 1116, there is nothing more you need to do.

If you file form 1116, then Carnival dividends will still count as British income. The UK does not withhold taxes on dividends, but it withholds taxes on interest. If you had British taxes withheld on interest, then Carnival dividends can be included in passive category income for the UK on form 1116. This will increase the limit on the foreign tax credit.

Form 1116 says that it should be filed only if "You paid or accrued certain foreign taxes to a foreign country or U.S. possession." If you paid no British taxes, then it would not be reportable on form 1116.
Last edited by talzara on Mon Feb 11, 2019 12:58 pm, edited 1 time in total.

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Re: Item on Vanguard Brokerage 1099 package "Div-Foreign Corp"

Post by talzara » Mon Feb 11, 2019 12:50 pm

RickBoglehead wrote:
Mon Feb 11, 2019 9:14 am
Carnival Corp was incorporated in Panama in 1972. Cruise companies both incorporate and flag their vessels outside the U.S. for both tax and safety rules reasons - they can have much less safe boats outside the U.S.
Carnival is a British company.

Carnival did a tax inversion in 2003 when it bought P&O Princess. Legally speaking, the transaction was inverted. P&O Princess actually bought Carnival and then changed its name to Carnival.
livesoft wrote:
Mon Feb 11, 2019 9:51 am
Also it is interesting to note that CCL is included in the S&P500 index.
S&P recognizes that the inversion was done for tax reasons. If Carnival had bought P&O, then there would be no question that it was still an American company.

Carnival's headquarters are still in Miami, not London. Its CEO is still American, not British. It's still called Carnival, not P&O. The combined company gets more than 50% of its revenues from North America and only 30% from Europe. It may be a British company de jure, but it is an American company de facto.

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