2 2020 PIMCO TAX INFORMATION | PIMCO SHAREHOLDERS
Dividend and Capital Gain
Distributions FAQ
Q: WHAT ARE DISTRIBUTIONS AND WHY ARE THEY
PAID?
A: Fund distributions are earnings from the fund’s operations.
The law requires that all prots be passed on to the fund’s
investors in order for the fund to qualify for special tax rules
afforded to funds that benet the shareholder.
Q: WHAT IS A CAPITAL GAIN DISTRIBUTION?
A: When a fund sells portfolio securities at a prot, the sale
creates a capital gain. Two types of capital gains are realized
by PIMCO funds – short–term and long–term. Net short–
term capital gains are distributed to shareholders as income
dividends and are taxed at ordinary income tax rates. For
2020, long–term capital gain distributions are taxed at a
maximum effective rate of 23.8% (20% maximum long–term
capital gain rate plus 3.8% Medicare tax).
Q: HOW IS A FUND AFFECTED IF THERE IS NO
REQUIRED DISTRIBUTION?
A: If a distribution is not required, there are no tax
consequences to shareholders or to the fund. If the fund has
not made a taxable distribution, shareholders will not receive
a Form 1099–DIV for that fund.
Q: HOW IS DISTRIBUTION ELIGIBILITY
DETERMINED FOR PIMCO FUNDS?
A: The timing of a distribution, and the determination of
shareholder eligibility to receive it, is based on the record
date, ex–dividend date, reinvestment date and payable date
which are typically dened as follows:
• Record Date: Purchases through this day are eligible to
r
eceive the distribution. Shares redeemed on this day are not
eligible to receive the distribution.
• Ex–Dividend Date: The date on which the distribution
a
mount per share is deducted from the fund’s NAV per share.
Tax Form Description
1099–DIV
Reports dividend and capital gain distributions from your PIMCO funds, excluding retirement plan accounts. Tax–exempt income
dividends paid by certain PIMCO municipal funds are reported in Box 11 of your 2020 1099–DIV. Any private activity bond interest,
which may be subject to the alternative minimum tax (AMT), is in Box 12.
1099–B
Reports redemption proceeds, including exchanges out, of any non–money market funds in your non–retirement account. Your
cost or other basis for shares that were sold and fall under the IRS’s cost basis regulations is included on this form in Box 1e. This
information is required to be reported to the IRS by PIMCO. If your shares have been transferred to PIMCO or have been converted,
we may not be able to provide this cost basis information to you. For general information about cost basis and the regulations, see
below or visit pimco.com/cost–basis.
1099–R
Reports any distributions (including rollovers, recharacterizations and conversions) taken from a retirement plan, such as an IRA, or
a
ny qualified retirement plan, such as a pension, profit sharing, 401(k) plan or tax–deferred annuity.
• Reinvestment Date: The date on which the distribution
proceeds will be reinvested, if so elected, in additional PIMCO
fund shares. Shares will settle on the payable date.
• Payable Date: The fund pays shareholders their proportional
a
mount of any distribution on this date. For PIMCO funds, the
payable date for distributions paid in cash, if so elected, is
normally the same business day as the ex–dividend date,
except for those funds with daily income distributions.
PIMCO fund shares purchased with reinvested distributions
are usually credited on the reinvestment date.
Cost Basis Regulation
A rule went into effect on January 1, 2012, requiring funds to
report cost basis information to shareholders and to the IRS for
“covered shares,” or those shares purchased on or after
January 1, 2012. When ling your tax return, you will be required
to use the cost basis reported in Box 1e of Form 1099–B to
calculate and report the gains and losses from your covered
shares to the IRS. Please note that retirement accounts are
excluded from the cost basis requirements.
For more information about the cost basis requirements, we
e
ncourage you to speak with your nancial advisor or a tax
professional. For general information about cost basis and the
regulations, visit pimco.com/cost–basis.