Tax News

CCH (cch.taxgroup.com) reports:

Beginning in 2009, dividends on employer securities distributed from an employee stock ownership plan (ESOP) under Code Sec. 404(k) must be reported on a Form 1099-R that does not report any other distributions according to that form's instructions. Under prior guidance intended to allow taxpayers to report Code Sec. 404(k) dividend income on short Form 1040A, a plan must use Form 1099-DIV to report payment of such dividends. Any other distributions from the ESOP that are not Code Sec. 404(k) dividends must be reported on a separate Form 1099-R. It is anticipated that the instructions to Form 1099-R will require a special code in box 7 of the form to indicate the tax treatment and rollover restrictions applicable to Code Sec. 404(k) dividends. Payments of Code Sec. 404(k) dividends made directly from the corporation to plan participants or their beneficiaries will continue to be reported on Form 1099-DIV.
Announcement 85-168, I.R.B. 1985-48, 40, is revoked.
Announcement 2008-56, 2008FED ¶46,463
Other References:
Code Sec. 404
CCH Reference - 2008FED ¶18,371.03
CCH Reference - 2008FED ¶18,371.075
CCH Reference - 2008FED ¶18,371.10
Code Sec. 6047
CCH Reference - 2008FED ¶35,983.077
Tax Research Consultant
CCH Reference - TRC RETIRE: 75,158
CCH Reference - TRC RETIRE: 75,204
CCH Reference - TRC RETIRE: 75,500