2007 Important Tax Information for Partners of the Exchange Fund

February 2008

Enclosed is your Schedule K-1 (Form 1065), which represents your share of the taxable income, deductions and credits incurred by Van Kampen Exchange Fund for the tax year ended December 31, 2007. The amounts in Boxes 5 through 20 should be reflected on your individual income tax return, as indicated by the instructions on Page 2 of Schedule K-1.

IRS Instructions
To help you complete your individual income tax return (Form 1040) and investment interest expense deduction (Form 4952), we have included a portion of the IRS instructions for Boxes 5 through 20.

Part III, Boxes 5 through 9b and in Box 11—Code “A”—Portfolio income or loss is not subject to the passive activity limitations. Portfolio income includes:

• income not derived through the ordinary course of a trade or business from interest, ordinary dividends, annuities or royalties

• gain or loss on the sale of property that produces such income

• gain or loss on the sale of property that is held for investment
  Page 2 of Schedule K-1 tells individual partners where to report this income on Form 1040.

Part III, Box 13, Other Deductions— CODE “J”—Amounts entered with code J are deductions that are clearly and directly allocable to portfolio income (other than investment interest expense and section 212 expenses from a REMIC). Generally, you should enter Line 13 amounts on Schedule A (Form 1040), Line 22. See the instructions for Schedule A, Lines 22 and 27, for more information. For the type of expense, write “From Schedule K-1 (Form 1065).”

These deductions are not taken into account when figuring your passive activity loss for the year. Do not enter them on Form 8582.

Part III, Box 20, Other Information—CODES “A” and “B”—Investment Income and Investment Expenses—Use the amounts on these lines to determine the amount to enter in Part II lines 4 and 5 of Form 4952.

Contacting Us
If you have any questions about this information sheet, or if you’d like to request account statements, please call (800) 847-2424. Telecommunications Device for the Deaf (TDD) users, call (800) 421-2833. You can also e-mail us by selecting Contact Us. For up-to-date account information, select Account Access.  If you have questions concerning your tax-reporting obligations, please contact your tax advisor.

Van Kampen does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. It was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws. Federal and state tax laws are complex and constantly changing. You should always consult your own legal or tax advisor for information concerning your individual situation.

Tax Information Center

View the pdf