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I compared my brokerage 1099 vs my monthly statements and noticed that a Short Term Capital Gain from a mutual fund had been distributed. This STCG was put into Box 1 (Ordinary Dividends) in the 1099. I questioned the brokerage and they said that Mutual Fund STCG distributions belong in ordinary dividends. I questioned several IRS people, one finally said that this is correct but could not tell me where it is specified in the tax code.

Pub 550, page 19 under Capital gains distributions states: Capital gain distributions are paid to or credited to your account. They will be shown in Box 2a of the form 1099-DIV you receive from the mutual fund..

Any Tax Gurus here that can shed light on this issue? Any idea where it's located in the tax code.?
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