return of capital


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Return of capital

A cash distribution resulting from the sale of a capital asset, or securities, or tax breaks from depreciation.

Capital Dividend

A dividend that comes from what an investor has paid into a publicly-traded company, rather than from its earnings. That is, a capital dividend occurs when a company gives back what the investor has invested. It may occur when a company must pay a required dividend but earnings make it unable to do so from its profits. Capital dividends may be a sign that a company is not financially healthy. In any case, they reduce the amount of capital that the company has to invest in its operations. They are also called return of capital.

return of capital

References in periodicals archive ?
If a corporation purchases its stock back from a shareholder, and the transaction does not fit one of the listed circumstances, the distribution will be characterized as either a dividend, a return of capital or capital gain under Sec.
The return of capital does not constitute income, as there is no economic gain or accession to wealth.
This month's column summarizes three SOPs on investment company accounting for high-yield debt securities; income, capital gain and return of capital distributions; and foreign currency and another SOP that rescinds Accounting Principles Board statements.
Management expects that the dividends paid for February, March and April, will consist entirely of a return of capital to stockholders.
This article summarizes the relevant rules for characterizing such damages or settlements as ordinary income, capital gain, nontaxable return of capital or fully taxable punitive damages.
To the extent that the aggregate amount distributed by the Fund based on a fixed percentage of its net asset value exceeds its current and accumulated earnings and profits, the amount of that excess would constitute a return of capital or net realized capital gains for tax purposes.
shareholder's return of capital could be taxed as ordinary income.
Tax Characteristics Estimates: The latest estimates of the tax characteristics of the fund's monthly distributions, including net investment income, realized and unrealized capital gains, and/or return of capital.
301(c)(2), defines a return of capital as a distribution in excess of the distributing corporation's current and accumulated E&P.
Additionally, smaller portions of the monthly distribution for JQC may later be characterized as capital gains and/or a return of capital because of the fund's modest investment in REITs.
In computing an "excess distribution," the entire amount of the distribution (regardless of whether it is a dividend, return of capital or capital gain) is included.
1125 per share, 39% represents short-term capital gain distributions, and 13% represents return of capital.