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
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