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Did anybody receive 1099 form for IOFIX?

I wonder whether IOFIX informs brokerages like Fidelity or TD that in 2020 about half of its distributions were not dividends but return of capital (ROC)? When I talked to IOFIX and Fidelity, they said that I should not worry and everything will be properly mentioned in 1099, but I have heard from a friend with an account at TD that this may not be the case.

So I wonder whether anybody received 1099 correctly describing dividends and ROC in the distributions of IOFIX? Any other related experience/comments?


  • FWIW, I held a different fund through Fidelity where about 5% of the dividends were ROC. I also sold some of the shares in November.

    Fidelity handled everything well. It reduced the amount of divs (box 1a) on the 1099 by the ROC amount and reported the ROC in box 3. To my delight it correctly prorated the ROC between the shares sold and the remaining shares and adjusted cost bases of each lot of shares accordingly.

    So at least on the Fidelity end, they know what they're doing. They even provided the 1099 on Feb 13th, two days before required. As far as the Alphacentric end is concerned, you'll have to see if some investors in IOFIX have more information.
  • Thank you very much, this is encouraging.
  • edited February 2021
    I did receive my 1099 concerning IOFIX; my shares are held with the transfer agent; not a brokerage.

    We receive a Form 2439 (Notice to Shareholder of Undistributed Long-Term Capital Gains) for the same company; one is from the transfer agent and the other one is from the brokerage. Form 2439 from the transfer agent is generally received weeks ahead of the one from the brokerage.
  • Fidelity reported it as a "Non dividend distribution". Now my interaction yesterday with Alpha Centric. Their site has no tax related information. Spoke to a rep because I needed to know if any of the dividends are from US Govt obligations which would be deductible on my state taxes. This info is freely available from all other funds that I have dealt with and most have it listed on their sites. The rep told me after consulting with several higher ups that he was not allowed to give me this information. What??? He told me to call Fidelity. So I call Fidelity and they do not have this and cannot provide this information. So Alpha Centric is NOT transparent in tax matters in their funds. Beware! I have now sold my position and will no longer do business with this firm!
  • edited February 2021
    I agree that Fidelity seems to get the 1099 details right, consistently. I've never found a mistake on cost basis and ROC (non-div distrib) accounting, nor on their treatment of wash sales. They don't figure for you the state tax deductions you'd likely get from fed obligations and your state's tax-exempt muni distributions.

    The only problem I've had with Fido lately has been four consecutive times they accounted for a specific-shares sale as first in-first out. Every time I called to correct that, I asked them to fix the problem with their programming. Finally, this week, they did.

    From reports I used to read when I owned IOFIX, it didn't look like they ever held much if anything in qualifying fed obligations, so I don't think you're missing anything there, @finder. Plus there are quite a few structured credit funds out there, so I doubt you'll miss AlphaCentric if you still want to invest in that category. Newer ones include JASSX and DBLNX.
  • @AndyJ .For 2019 IOFIX distributions included 10.71% in Federal obligations. I cannot remember how I got that figure but I would have not used it if it was not correct. Depending on the amount invested this could be a good chunk of a deduction on state taxes if the % amount was similar this year. I decided to go with SVARX which has a chunk of IOFIX in it. Thanks for the other fund info. Much appreciated.
  • edited February 2021
    Thank you very much for responding. I believe that as of now, prior to sending us 1099 form, Fidelity considered all their distributions as dividends (as listed in my yearly report), and I know that they did not subtract ROC from my basis in IOFIX yet. In fact, IOFIX did not even send its 19(a) form for December yet.

    I just received a preliminary version of 1099 Div from Fidelity. (They wait for some info from another fund, they have full information from IOFIX, but incomplete info from another fund.). They list all distributions from IOFIX as ordinary dividends, not a word about ROC. Thus as of now it seems that there is a problem.

  • @fundly: Thanks for correcting my post. Right, how did you find that percentage if it wasn't from AlphaCentric? Maybe you had better luck last year than finder did this year getting it from AC?

    @finder: I bet you know this, but just in case, ROC on the Fido 1099 shows up under nondiv distributions. I just looked at mine again, and it's on the last page. (Had some from ETNMX and PFNIX.) Yes, sounds like there's a problem if you've got 19a's with ROC info & Fido's not showing it. (The recording on the CSR line there said Monday, I think it was, that it was a 35m wait to get somebody on the phone.)
  • @AndyJ
    If I remember correctly I got the information when I called them last year. It is truly remarkable that this firm is now refusing to divulge information required for tax preparation. I wonder what the SEC would think. I just do not have the time to continue to deal with this issue.
  • I hold some IOFAX at Schwab and since the disastrous fall in the share price last year, I have received an email referring me to the monthly AC details on the distributions, with the ROC clearly identified. Unfortunately I have not archived or saved those emails, so I’m not sure how I’m going to access the information when I do my taxes. Given what others are saying here it may be my job to track down the ROC monthly figures and plug them into TurboTax. I’ll need the ROC info for 2021 taxes because I’m selling down my position now, but I had no sales in 2020.
  • My 1099 from the transfer agent has total ordinary dividends, qualified dividends, and non-dividend distributions with amounts.
  • I just called to Fidelity, they discussed it with tax people without connecting me to them, and the reply was that I should wait for the final version of 1099 and if there is any issue I should contact IOFIX directly. So I will wait.

    I have 19(a) forms from March to November 2020 as pdf files. Note that the forms 19(a) are not personal, my name is not present on them, they are addressed to ALL shareholders. However, I am not sure that one can use them for filing tax returns since each of them says that this is just AN ESTIMATE, not for tax reporting. Each form that I have says that approximately half of the distribution is ROC, the March form is special, it says that 100% of it is ROC. This is very different from what I see on my preliminary 1099; let us hope that this issue will be clarified.

  • That’s very helpful, @finder. I was referring to the same 19(a) forms and with your explanation I now realize that a more precise tabulation of ROC will be required. I hope Schwab does it right.
  • From what I've read 19a's mean nothing... it's just a guess. You have to wait for the official 1099 for accurate numbers.
  • I just received the 19a for IOFIX showing the estimated FY-2020 source of distributions to consist of 50% ROC. As others have mentioned however these are not the final figures.

    From the 19a notice:

    "Not Tax Reporting. The amounts and sources of distributions reported in this notice are only estimates in order to comply with SEC regulations and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon each Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV in early 2022 for the 2021 calendar year that will tell you how to report these distributions for federal income tax purposes (e.g., ordinary income, long-term capital gain or return of capital)."
  • edited February 2021
    Please pay attention to the accuracy of their reporting in this notice (which covered only December 2020). They write:

    "The Fund will send you a Form 1099-DIV in early 2022 for the 2021 calendar year that will tell you how to report these distributions."
  • I have owned IOFIX for several years but also traded it several times at Fidelity and Schwab. I checked my 1099-DIV for 2018,2019 Nondividend Distributions and they were at zero. To tell you the truth, I really don't care, I just copy all these numbers to my tax software annually.
  • edited February 2021
    I invested in IOFIX in April 2020 in my taxable accounts. I have no immediate plans to sell it. There is a difference between paying taxes for ordinary dividends now, or for long term capital gains in the future, e.g. any time after April 2021, in my case. But if one frequently trades in and out, then of course there should not be much difference.
  • Hey all... a bit off topic (sort of)... but I still own PONAX and IOFIX came across my radar and have read a lot of positive comments on this board about it. It's performing just fine or better than fine in 2021... but did anyone here have palpitations in 2020 when the 1 year return was -9.59%? with the ER at 1.68%? I'm not being snarky... just trying to understand the logic of why you believe in it LT. Reviewed FD's chart showing the fund's momentum and it was logical. #IStrugglewithBonds and understanding the ballast / importance if you ignore 2008-which, hard to believe, was 13 years ago.
  • edited March 2021
    After many attempts, I received an answer from AlphaCentric about dividends vs return of capital in IOFIX. It is rather unusual, so I will put it here:

    The 19A document is not a tax reporting document. It is an SEC reporting requirement. It has limitations:

    It is based on GAAP reporting.
    It is based on book value and not tax-adjusted.

    The 1099 is a tax document and follows different rules. It depends on the tax year end for the fund, the calendar year, etc.
    The Fund’s tax year end is 3/31. The return of capital rules allow us to only report known return of capital for the tax year. Here is what this means.

    Only verified return of capital between April 1 and March 31 can count towards return of capital (i.e., you cannot estimate return of capital for the April 1 to December 31 period). Once this is calculated, it is applied on a calendar year basis. In the case of our fund, January, February and March are the only months where we would report the known return of capital from the previous April 1 to the current 3/31.
    The return of capital on the 2020 1099-DIV reflect the return of capital between April 1, 2019 and March 31, 2020 applied to the months of January to March 2020.
    For the return of capital generated between 4/1/20 and 3/31/21, that will be applied to January to March 2021 on the 1099-DIV.
    This is why the 1099-DIV for the fund only shows return of capital from January to March and then income the rest of the months.

    When you look at the 19A’s provided from April to December of 2020, you will see that these say the fund will send a 1099-DIV for these periods in early 2020 for the calendar year 2021. This is also why in April 2020, the current month and fiscal YTD amounts of return of capital are identical because it is the first month in the new fiscal year.
    Can you rely on the 19A? Yes and no. It has its limitations as discussed above. However, if you view the 19A and notice that the amount of return of capital is high and is occurring after 3/31, then it’s likely it will show up on the next year’s 1099-DIV. However, there is a limitation in that only January to March can absorb the return of capital. If we had so much return of capital that it could not be absorbed, then it would be lost. It is best to speak to a tax advisor about how to best handle this.

    This means that the strange sentence in 19(a) "The Fund will send you a Form 1099-DIV in early 2022 for the 2021 calendar year" is not a typo but their method of reporting.
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