Tax Information

Form 1099-B

What does it report?

Form 1099-B reports net proceeds from the sale of shares through the share redemption program in taxable accounts.

These proceeds are categorized by short-term gains, long-term gains or losses. Short-term gains are generally taxed at your ordinary income rate and long-term gains at the long term capital gains rate, which is typically lower than the ordinary income tax rate.

What else should I know?

This form may report cost basis, gains and losses, and other information to report the sale or exchange of shares.

If you sold shares in a taxable account during the tax year, such a transaction will be reported on Form 1099-B. If shares are “covered securities” as defined in Internal Revenue Code Section 6045, the cost basis and corresponding gain or loss is reported. If all or any of your shares are “uncovered securities”, which are generally shares purchased prior to January 2011, you are responsible for calculating the specific taxable gain or loss resulting from the total proceeds reported on Form 1099-B. Please consult a tax professional for guidance.

Form 1042-S

What does it report?

An IRS Form 1042-S reports a non-US shareholder’s U.S. source income. It is typically mailed to you in mid-March. The Form 1042-S reports your total annual distributions including dividends, short-term capital gains, long-term capital gains, return of capital, or other reportable amounts. The distributions types are identified by the income code in Box 1 of the Form. (See the back of Form 1042-S for a list of income codes and their descriptions). The Form 1042-S also reports the amount of federal tax withheld from distributions because of a non-US-resident status. The withholding rate applied is also shown on the Form 1042-S. The withholding rate is determined under the U.S. Internal Revenue Code and applicable tax treaties based on the shareholders country of tax residence and Ares’ receipt of a properly completed “Certificate of Foreign Status” (e.g. an IRS Form W-8BEN, W-8BEN-E, etc). Please see IRS Publication 515 for more questions about U.S. source income and withholding tax. Note that in some cases if a Form W-8 is not provided by a non-US shareholder, a backup withholding tax may be applied to distributions that normally would not be subject to withholding if a W-8 had been provided.

What else should I know?

If the amount withheld was incorrect or you qualify for a lower withholding rate than applied, you may be able to file a U.S. tax return to request a refund or correct any tax amounts from your distributions. Further, depending on where you reside, you may also be able to apply any tax withheld and reported on the Form 1042-S as a credit against your local tax liabilities. Please consult with a professional tax advisor about your specific situation.

Form 1099-DIV

What does it report?

Form 1099-DIV reports dividends (ordinary and qualified) and capital gains from taxable accounts, regardless of whether they are paid in cash or reinvested.

Each distribution type will be listed separately. This information can then be used to identify how you will be taxed. Ordinary dividends are generally taxed at your ordinary income tax rate. Qualified dividends and capital gains may be taxed at the long-term capital gains rate, which is typically lower than the ordinary income rate.

What else should I know?

The Tax Cuts and Jobs Act enacted on December 22, 2017, created a new deduction known as the section 199A deduction. Under this rule, eligible taxpayers may be entitled to a deduction of up to 20 percent of their real estate investment trust (REIT) dividends that are taxed as ordinary income. This amount is reported in Box 5a of Form 1099-DIV and is included in the amounts reported in Box1a. Please consult with a professional tax advisor about your specific situation. Ares and its affiliates do not provide tax advice.