A Couple of Tax Preparation Questions

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Hello everyone!

So, it's that time of year again and I've already started pounding my head against the computer as I work through trying to make sense of my taxes.  Towafds that end I have a couple of quick questions.  First the easy one:

(1) In August 2016 I closed on a new custom home some three miles away from my then current residence which I also owned.  I moved into the new house and put the old one up for sale but it still hadn't sold as of the end of the year.  Can I deduct mortgage interest / property taxes for the old home even after I moved?  Or can I only deduct that portion on the 1098 that corresponds to january through the closing date on the new home (which has a much larger mortgage).

Now the slightly more complicated question:

(2) On line 3 of the summary section of the 1099-Div issued for my Wells Fargo Brokerage it lists a $750 nondividend distribution.  According to the detail section the distribution was paid on 12/27/2016 by the Vanguard Inflation Protected Mutual fund (VIPSX).  My position is the result of 25 or 30 different lots bought over the last 10 years.  Here is the verbiage from the TaxAct dialog:
Tax Act Software said: Dividend Income - Liquidation Distributions
On the Form 1099-DIV from Wells Fargo Clearing Services, LLC you entered nondividend distributions. These distributions are a return of capital (basis) and reduce your basis in the stock. If this amount is greater than your basis you need to report the excess as a capital gain on Form 8949. Enter the adjusted basis of the stock before any reduction for the nondividend distributions, or check the box to indicate your basis was zero.
Adjusted basis of stock before reduction for nondividend distributions


How do I figure my basis?  Which lot does the distribution apply to?  Does it matter?

Thanks in advance for any help!

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investingstuff1971 said:   
Now the slightly more complicated question:

(2) On line 3 of the summary section of the 1099-Div issued for my Wells Fargo Brokerage it lists a $750 nondividend distribution.  According to the detail section the distribution was paid on 12/27/2016 by the Vanguard Inflation Protected Mutual fund (VIPSX).  My position is the result of 25 or 30 different lots bought over the last 10 years.  Here is the verbiage from the TaxAct dialog:
Tax Act Software said: Dividend Income - Liquidation Distributions
On the Form 1099-DIV from Wells Fargo Clearing Services, LLC you entered nondividend distributions. These distributions are a return of capital (basis) and reduce your basis in the stock. If this amount is greater than your basis you need to report the excess as a capital gain on Form 8949. Enter the adjusted basis of the stock before any reduction for the nondividend distributions, or check the box to indicate your basis was zero.
Adjusted basis of stock before reduction for nondividend distributions


How do I figure my basis?  Which lot does the distribution apply to?  Does it matter?


 

  
Okay, so having now read the IRS documentation a sufficient number of times so that it finally sank in, I think that I can answer the second question myself.  I can basically choose any lot that has a basis greater than $750 and use that number and not pay any taxes now.  The challenge of course will be to somehow keep track of the diminished basis for the next 20 years before I finally sell this stuff.

OP take this time to try to put together a detailed accounting of all your 25 or 30 purchases and keep that information safe. Records get destroyed, lost, etc, and this is a good lesson for future years.

investingstuff1971 said:   (1) In August 2016 I closed on a new custom home some three miles away from my then current residence which I also owned.  I moved into the new house and put the old one up for sale but it still hadn't sold as of the end of the year.  Can I deduct mortgage interest / property taxes for the old home even after I moved?  Or can I only deduct that portion on the 1098 that corresponds to january through the closing date on the new home (which has a much larger mortgage).
  
You can treat it as a second home and deduct the interest and property tax. You can continue to do this as long as you don't rent the house out. Source: IRS Pub 936 

doveroftke said:   
investingstuff1971 said:   (1) In August 2016 I closed on a new custom home some three miles away from my then current residence which I also owned.  I moved into the new house and put the old one up for sale but it still hadn't sold as of the end of the year.  Can I deduct mortgage interest / property taxes for the old home even after I moved?  Or can I only deduct that portion on the 1098 that corresponds to january through the closing date on the new home (which has a much larger mortgage).
  
You can treat it as a second home and deduct the interest and property tax. You can continue to do this as long as you don't rent the house out. Source: IRS Pub 936

  
Thanks devoeroftke.  I was hoping that that was the case, but I thought that there was some kind of reasonable distance requirement between a first and second home and these are only three miles apart.  But I had a good read of the IRS Pub you linked and there is nothing about that so I guess I'm good.  It may be that the distance requirement that I'm thinking of only applies to trying to finance the purchase of a second home.  In any event, thanks again!

I believe the distance requirement is for moving expenses.

Stubtify said:   OP take this time to try to put together a detailed accounting of all your 25 or 30 purchases and keep that information safe. Records get destroyed, lost, etc, and this is a good lesson for future years.
  Right.  Otherwise, you can hold it until you die and then the basis steps up to current FMV and the return-of-capital distributions end up being permanently tax free, rather than merely delayed and essentially deferred long term capital assuming you hold for a long time.



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