Capital gains distributions from broker account are over 100K

[Greta]

This produced an unexpected under-estimated penalty. Is it possible to use Form 2210 to do annualized income calculation and say that the 100K came in the 4th quarter?

[Terry53029 · Accepted solution]

Just annualize it honstly and the penalty will probable be reduced close to if not zero. That is what I have done with a few clients ( I have them do it, as they need monthly statement from broker) Well worth their time

[BobKamman]

For many funds, the CGDs are paid in December.  Some of them pay semi-annually.  If you have the trading symbol you don't need the monthly statements, you can find the dividend history online.  But if it was "unexpected," why doesn't using last year's tax as the baseline work?  

[Greta]

Well, I misspoke, it wasn't "unexpected." His penalty IS in fact based on last year's tax liability. I did not suggest last year for my client to make estimated payments additional to his withholding, because frankly I never expected the 2025 stock market year to be as hot as in 2024. I'm still in shock at its 2025 performance. What do I suggest for 2026? I'm told that brokers know in November what the capital gains distributions will be. I should request that my investor clients ask their brokers in November and let me know then. Some who get their RMD in one chunk at year's end can send a lot towards the tax liabilities.

[BobKamman]

Some of us have been around long enough to know that mutual funds can throw off the most capital gains in the years the market goes down.  Because -- they sold before it happened.  And some stocks will gain, even when the averages lose.  (The Vanguard Energy Index Fund is up about 40% this year.)