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Respondent determined a deficiency of $1,099 in petitioner’s
2000 Federal income tax.
The sole issue for decision is whether a mutual fund
distribution to petitioner is a capital gain dividend or a return
of capital.
Some of the facts in this case have been stipulated and are
so found. Petitioner resided in Sauquoit, New York, at the time
he filed his petition. Section 7491(a) does not apply because
this case involves a legal issue.
On February 10, 2000, petitioner acquired 955.543 shares of
Vanguard U.S. Growth Fund (mutual fund) from The Vanguard Group
(Vanguard). The shares were acquired at $43.45 per share, for a
total cost basis of $41,518.34.
In 2000, Vanguard distributed $7,118.80 to petitioner from
his mutual fund. Vanguard sent petitioner a yearend statement,
which characterized the distribution as “Long-term gains”.
Vanguard reported the $7,118.80 in Box 2a, Total Capital Gain
Distributions, on a 2000 Form 1099-DIV, Dividends and
Distributions. Respondent determined that the $7,118.80 was a
capital gain dividend.
Petitioner timely filed his Form 1040, U.S. Individual
Income Tax Return, for taxable year 2000. On Schedule D, Capital
Gains and Losses, attached to petitioner’s Form 1040, petitioner
reported $23,245 in “Capital gain distributions” from 6 different
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Last modified: May 25, 2011