What date is used to report interest on 1099, trade date or settlement date?

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water2357
Posts: 654
Joined: Sat Sep 12, 2020 9:24 am

What date is used to report interest on 1099, trade date or settlement date?

Post by water2357 »

I'm finding that some Vanguard brokerage CDs have settlement dates that occur more than a month after the trade date. If this occurs at the end of a year such that the trade date (coupon date) is in December but the interest was not actually paid until January of the following year (settlement date), in what year will the interest be reported on a 1099 for tax purposes?

I have also posed this question to Vanguard, but have not yet received a response and was hoping that someone here may already know the answer. I've tried searching but most searches only return information on using the trade date for security sales and purchases, but nothing about interest on the security. Normally I would think it should be the date the interest is available to the CD holder, i.e. the settlement date, but based on having to use trade date for bokerage purchases/sales, I'm not sure what it should be.

Thanks.
Lionel Hutz
Posts: 379
Joined: Sat Jan 30, 2021 12:18 pm

Re: What date is used to report interest on 1099, trade date or settlement date?

Post by Lionel Hutz »

I could be wrong but I have to assume trade date, the day on which the assets were actually sold in the market. iRS doesn’t care when the funds are available to you, but rather when they were transacted.
HomeStretch
Posts: 11334
Joined: Thu Dec 27, 2018 2:06 pm

Re: What date is used to report interest on 1099, trade date or settlement date?

Post by HomeStretch »

No experience with Vanguard brokered CDs. But if the interest is reported similarly to the tax reporting for dividends on Vanguard money market funds and mutual funds, the amounts included in Form 1099 will be based on the trade date. It’s the concept of “constructive receipt”.
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