Reinvested dividend
plans allow you to buy more shares of stock in the corporation
instead of receiving the dividends in cash. If you are in a reinvested dividend plan and
you use your dividends to buy more stock at a price equal to its fair market value, you
must report the reinvested dividends as income on your tax return. You should receive
Form 1099-DIV from the payer.
If
you are a member of a reinvested dividend plan that lets you buy more stock at a price
less than its fair market value, you must report as income on your tax
return the fair market value of the
additional stock purchased with the reinvested dividends on the dividend payment date.
Other tax rules may apply.
Related tax
information about reinvested dividends
IRS publications about reinvested dividends: Additional information on reinvested dividends can be found in IRS Publication 550,Investment
Income and Expenses, and IRS Publication
564,Mutual FundDistributions. Also refer to Chapter 9 of
IRS Publication 17,Your Federal
Income Tax.
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For further information regarding IRS
rules and regulations and your particular tax or IRS situation you should
consult with a Certified Public Accountant, Enrolled Agent, Attorney, or
other tax advisor.
Investment
Income and Expenses, and IRS 
