J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

32.5 Fund Expenses

If you own shares in a publicly offered mutual fund, you do not pay tax on your share of the fund expenses. There should be no entry in Box 5 of your Form 1099-DIV. However, expenses of a non–publicly offered fund are included in Box 5 of Form 1099-DIV and must be reported as a taxable dividend, even though the amount has not actually been distributed to you. This amount is included as a fully taxable ordinary dividend in Box 1 of Form 1099-DIV. An offsetting deduction may be claimed on Schedule A but only as a miscellaneous itemized deduction, subject to the 2% adjusted gross income floor (19.1).