Return of Capital Distribution

Return of Capital Distribution

A return of a capital distribution is a distribution that is not from the corporation's earnings and profits. The distribution is not taxable, but reduces the basis of the stock. Distributions in excess of basis are taxed as capital gain.
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tax consequences to such holder related to a return of capital distribution.
A return of capital distribution does not necessarily reflect the Funds investment performance and should not be confused with yield or income.
312(f)(2); therefore, the E&P consequences stemming from an extraordinary dividend should produce the same effect as a return of capital distribution under Sec.
If the return of capital distribution exceeds the basis for the mutual fund shares, he or she treats the excess as a gain from the sale of the shares.
A return of capital distribution does not necessarily reflect the fund s investment performance and should not be confused with yield or income.
The seller is able to increase his basis in the acquiring corporation by the amount of his basis in the issuing corporation in order to determine the extent of any return of capital distribution. (5) H.
959 from the definition of "excess distribution." However, this provision is not applicable to a return of capital distribution. Example 2: During 1989, a U.S.
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.
Proposed SOP, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies.