Adjusting Bases for Non Dividend Distribution


First of all, I’m not sure if this question is on topic for the forum or not. If it’s not, please feel free to delete it. Anyway, I am working on my taxes and I have a quick question. The 1099 my brokerage (Wells Fargo) sent me for 2016 indicated that there was a non dividend distribution of ~$800 for one of my funds (VIPSX). At the time, I made a note in my records and adjusted the basis for one of my lots to account for the $800. My intention was that when I finally sold that lot, I would use the adjusted basis.

In 2017 I made a few very small sell trades on the fund. Really, I was just cleaning up some reinvest divs off my balance sheet to make things neater. On the 1099 for 2017 that I just received I notice that the bases for each those trades is slightly less than what my records indicate. Further, in the ‘Additional Information’ column of each trade the 1099 includes a note which says ‘Original Basis: xx.xx’ where ‘xx.xx’ does in fact agree with my records.

So, I’m guessing what happened here is that Wells Fargo is spreading the ~$800 over all 25 or 30 trades in the fund and adjusting each basis by a small amount. My way (adjust a single trade) seems much cleaner and I’d like to file against those numbers. My question then is, will it cause me any problems if my numbers are slightly different than what Wells Fargo reports to the IRS? I would think not, but I have no practical experience with this stuff and trying to get into the mind of the government is sketchy business. I really don’t want to have to file an amended return over this.

Thanks in advance!

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To answer one of your questions - brokerages have different rules for reporting basis than taxpayers have. It’s pretty common for there to be differences between broker reported basis and the basis you report on your return.

However, you might have to report the adjustment on whatever form accompanies Schedule D. Not sure about this though.

You should do it the correct way, regardless of what seems cleaner. If it triggers a matching error, you’re going to have to go back anyway to figure it out. Your way may be the correct way (even if WF didn’t make a mistake - see above), but I would bet the IRS has issued some sort of guidance on how to handle this so you probably can’t just make up a way to treat it.

In the future, you might want to reconsider automatic dividend reinvestment (and WF Advisors ;)).


Thanks for this. I do recall researching this when I recived the 1099 with the non dividend disbursement and the guidance I found at the time was that I could use any lot which qualified for long term treatment to make the adjustment. So I’m pretty sure that both my approach and Wells Fargo are valid. I really want my own records to agree exactly with what I file and if I use the WF numbers here, I’ll have to alter all of the 20 or so lots that I have to match their bases. It might be worth a call to the IRS.

Yes to the first! I turned off dividend reinvestment several years ago when I realized the bookkeeping I was setting myself up for. Finally, in 2017 I sold all of those tiny lots for all of my funds so that I’d have one less hassle going forward. With respect to WF Advisors, I understand that they generally suck, but I got grandfathered into 100 free trades a year which is more than I need to maintain my lazy index fund portfolio so my investing costs me nothing. I can’t imagine that I would benefit from a move.

Thanks again!

We have a thread for that:


I figured - I have the same. Made sure I opened up a taxable account and IRA right after they announced they were doing away with the free trades but still grandfathering accounts opened before a future date.

You did not receive a $800 non-dividend distribution. You received a $X.XX per share non-dividend distribution, that happened to total $800 because of the number of shares you own. The cost basis is adjusted accordingly for each share you own, not by lot or by trade.

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