Common Tax Questions and Answers

General

Q: I misplaced my 1099 forms. Can I get duplicates?
A: Yes. You can view or order duplicate forms online at vankampen.com by selecting Investor Services. Once you have accessed your account, click the Tax Forms button. For more information on obtaining duplicate forms, call 800.847.2424 and press 6. Please keep in mind, obtaining duplicate forms can take time

Q: Will I receive a 1099-DIV form if I received less than $10 in distributions?
A: No. If you received less than $10 in distributions from your fund, you will not receive a Form 1099-DIV; however, any distributions you do receive will appear on your year-end statement. You are required to report these items on your tax return.

Q: How can I find out about any state tax-exemptions on income my fund earned?
A: Certain states have special exemptions for income earned from U.S. government securities and tax-free municipal securities issued in that state. If your fund earned income from tax-free municipal securities, you should have received the Income Breakdown insert and Form 1099-INT. The Income Breakdown lists your fund’s income by state, which should help you identify any income that may be tax-exempt in your state. These inserts, and other tax-related information, can also be found at the Tax Information Center on vankampen.com. If your fund earned income from U.S. government obligations, you’ll find this information on the Government Obligations insert included with Form 1099-DIV. Consult your tax advisor about the specific rules in your state.

Q: According to my 1099 forms, federal income tax was withheld from my fund’s distributions. Why?
A: Federal law generally requires us to withhold a percentage of any distribution, redemption or exchange if we do not have a correct and certified Social Security or Taxpayer Identification number on your account. The IRS tells us which Social Security or Taxpayer Identification numbers are not correct or certified and requires us to perform this withholding. The withholding amount shown on your 1099 forms should be reported as “federal income tax withheld” on your federal income tax return. To register the correct Social Security or Taxpayer Identification number, please download a W-9 form, complete and sign the form and return it to:

Van Kampen Investor Services, Inc.
P.O. Box 947
Jersey City, NJ 07303-0947

Van Kampen will then register your account with the correct information.

Q: Will nonresident aliens receive any special tax forms?
A: Yes. If you are a nonresident alien who received income that is subject to a nonresident alien tax, you can expect to receive a Form 1042-S in late March.

Q: I have a Higher Education Fund. When will I receive the tax form for that account?
A: Form 1099-Q reporting distributions from a 529 plan will be mailed by January 31, 2008, under separate cover.

Dividends and Capital Gains

Q: Do I need to report reinvested dividends and/or capital gain dividends as income?
A: Yes. Income from taxable funds and all capital gain distributions are taxable, regardless of whether you receive them in cash or reinvest them in additional fund shares. You should keep a record of the amount of dividends reinvested because this will increase your cost basis in the fund’s shares. By keeping track of reinvested dividends, you’ll be able to determine the correct taxable gain or loss when you redeem or exchange your fund shares. Reinvested dividends and capital gains in a retirement account are generally not reportable until withdrawn from the account.

Q: Form 1099-DIV reports ordinary dividends and capital gains on separate lines. Are they taxed at different rates?
A: Yes. For ordinary income, the highest marginal tax rate for an individual is 35 percent. Long-term capital gain distributions are taxed at a maximum rate of 15 percent.

Q: Why did my fund pay out a capital gain distribution for 2007 if the fund’s value declined?
A: Although your fund’s value may be down for the year, the securities that were sold by the fund’s manager could have appreciated significantly since the manager first purchased them. Capital gains are based on when the fund manager purchased those securities, regardless of when you purchased your shares.

Q: What is a qualified dividend?
A: A qualified dividend is paid to the fund by a “qualified” company. This is defined as a domestic company traded on a qualifying exchange or a foreign company where the country of origin has a comprehensive income tax treaty with the United States that includes an exchange of information program. There is also a holding period requirement that must be met for a dividend to be deemed “qualified.” Please read on for more information about qualified dividends.

Q: Will all distributions reported to me as qualified dividends be taxed at 15 percent?
A: Not necessarily. In order to qualify for the reduced tax rate, you must have held the dividend-paying shares for 61 days out of a 121-day span covering the 60 days before and the 60 days after the fund’s ex-dividend date. (Note: the ex-dividend date is a critical factor in determining whether a shareholder is eligible to receive a declared dividend.) When counting the number of days you held the shares, include the day you sold your shares, but not the day you acquired them.

Q: Why are tax-exempt dividends being reported to the IRS on Form 1099-INT?
A: The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) eliminated the exception from tax reporting for all tax-exempt interest including tax-exempt dividends of $10 or more received from mutual funds. Under the new rules, tax-exempt dividends from mutual funds (including money market funds) must be reported on Form 1099-INT or a suitable substitute.

Q: I own a tax-exempt fund, why did I receive both a Form 1099-DIV and Form 1099-INT?
A: If your tax-exempt fund had any taxable income, you will receive Form 1099-DIV to report your share of that taxable income distributed to you. Because of the new requirement to report tax-exempt dividends, you will also receive Form 1099-INT to report the tax-exempt dividends that you received in 2007.

Redemptions and Exchanges

Q: Do I need to report gains or losses on shares I haven’t redeemed or exchanged?
A: No. You only need to report gains or losses when you exchange or redeem fund shares.

Q: I exchanged shares from one Van Kampen fund for shares of another. Why did I receive a 1099-DIV and a 1099-B for the fund I was in before?
A: When you exchange shares, you are selling shares of one fund and buying shares of another. That means you will recognize a capital gain or loss on the shares that you exchanged. Form 1099-B shows the value of the shares you exchanged on the trade date, while Form 1099-DIV shows ordinary income, capital gain, or return of capital distributions for that fund in 2007.

Q: How are capital gains or losses determined when I exchange or redeem shares?
A: Capital gains or losses represent the difference between the price you originally paid for your shares and the value of your shares when you exchanged or redeemed them. This includes any shares purchased through dividend reinvestments. Your cost basis is reduced by any return-of-capital distributions you may have received since you first invested in the fund. The value of your exchanged or redeemed shares appears on Form 1099-B. If you received your fund shares by gift or inheritance, consult your tax advisor.

Q: My tax form doesn't show any cost-basis information; where can I find it?
A: If the cost-basis information does not appear on your tax form, then it is not available. To determine your cost basis, you will need your transaction information. Please see your account statements—and consult your tax advisor.

Tax-Exempt Funds

Q: What is the federal alternative minimum tax (AMT)?
A: The federal AMT applies to individuals who enjoy certain tax benefits, such as large deductions or exclusions from income. This tax prevents them from avoiding a minimum tax liability on their income. If your tax-exempt fund invests in specified private activity bonds, you could be subject to the federal AMT. You will receive the percentage that is a tax preference item on the Income Breakdown insert and Form 1099-INT, and they will list the percentage of your fund’s distributions that could be affected. Please discuss it with your tax advisor.

Q: Could any distribution from tax-exempt funds be subject to federal income tax?
A: Yes. Under current tax law, certain tax-exempt funds may be required to recognize taxable income on long-term and short-term capital gains or securities that were acquired at a discount. If you are a shareholder in one of these funds, you may have received a Form 1099-DIV reflecting a nominal amount of taxable ordinary income and a Form 1099-INT reporting the tax-exempt amount.

Van Kampen SponsoredIndividual
Retirement Accounts (IRAs)

Q: My IRA is invested in Van Kampen Funds. I redeemed some of my shares in 2007 and had the proceeds sent directly to me. How do I report that amount on my tax return?
A: If you redeemed shares of your IRA during the year, you’ll receive Form 1099-R. To determine what portion of the distribution is taxable, please consult IRS Publication 590, Individual Retirement Arrangements (IRAs), and your tax advisor. All of your contributions will be reported to you on Form 5498, IRA Contribution Information, which you will receive in late May or early June from Van Kampen.

Q: Why did you withhold state income tax from my IRA?
A: Van Kampen is required to withhold state income tax on certain distributions made from Van Kampen sponsored retirement plans where State Street Bank and Trust serves as custodian. Please refer to the Tax Information Center on our website at vankampen.com for a complete list of states for which Van Kampen applies state withholding.