Question: I have a number of stocks held in "street name" by my broker. Each year, I receive a Form 1087 from the broker showing total dividends for the year. When I prepare my tax return, I break this figure down by individual companies paying the dividends, primarily because several dividends are nontaxable (return of capital) in whole or in part. This is time-consuming and requires an extra schedule since there isn't enough room for all of them on Schedule B. Would it be acceptable if I just listed the name of the broker and total dividends, then showed those companies with nontaxable dividends?
Answer: It's even easier than that. The proper method is to list just the name of the broker and total dividends on Schedule B, as you suggest. That total information is what is provided to the IRS by the broker, either by copy of Form 1097 or by a computer tape listing.
But it isn't necessary to list the names of the companies paying nontaxable dividends. Simply enter the total of these return-of-capital dividends near the bottom of Schedule B (line 12 on the 1982 return) for subtraction from total dividends received.
When your stocks are held by a nominee (your broker) in street name, you are not required to break down the totals. But of course you should have the list of individual nontaxable dividends in your tax file in case the IRS should ask for the supporting data in an audit.
Q: My company terminated its profit-sharing plan last September; I rolled my share over into an IRA. My question: Am I allowed to add any money now to my IRA to count on my 1982 tax return?
A: The answer--up to April 15, anyway--was yes; but since this column won't appear in print until after that date, it is now too late to make any 1982 IRA deposits unless you had filed Form 4868 requesting an extension.
Even though the deadline has passed for 1982 IRA payments, the question is valid for this and succeeding years as well. And the rule is that the rollover of a lump-sum distribution from a company retirement plan into a personal IRA does not count against the $2,000 annual limit.
You may still deposit up to the ceiling in your IRA. But the two IRAs must be segregated; you may not mix rollover funds and annual deposits in the same account.
If you made a last-minute decision at tax-time to start an IRA for 1982 and just dumped your money into the first available account, you really should start now to pick your 1983 IRA vehicle.
You may have more than one IRA. In fact, you can invest in more than one in the same year, as long as the total doesn't exceed the annual ceiling--$2,000 for a single person, $2,250 if you're married with a non-earning spouse (but never more than total earned income for the year).
Starting early has two advantages: You have more time to explore the various alternative investments; and by investing early in the year your funds start earning tax-deferred income earlier.
Last fall I mentioned a couple of booklets on IRAs available free for the asking--one from the American Council of Life Insurance, the other from the Investment Company Institute. Many mutual fund sponsors, insurance companies and brokerage houses have free booklets as well.
There are also some more detailed publications around--books that you must pay for. One is "IRAs, Your Complete New Money Guide," published by the editors of Money magazine and available at $2.95 at most bookstores and magazine stands.
"The IRA Book" is a little more expensive--$5.95--but I think it's a little more readable and contains more information. While the "Money" book has a much more extensive directory of mutual funds, for example, "The IRA Book" contains comparative listings of accounts offered by banks, S&Ls and insurance companies as well.
It is published by the Center for the Study of Services, the local nonprofit consumer group that also publishes the "Washington Consumers' Checkbook."
You can order "The IRA Book" by mail for $5.95 (including postage) from The IRA Book, 1518 K Street NW, Washington, D.C. 20005.
To claim the deduction for two-earner married couples, file Schedule W with an amended return on form 1040X. A typographical error in last week's column gave the wrong schedule.