Return of Capital
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Return of Capital We have one income item for 2011 that is categorized as "Return of Capital". In the year-end reports for 2011, however, I could not find this item listed in the Income report or in the Capital Gains report. Shouldn't this item be reflected somewhere in the year-end reports? Thanks in advance for your help! On Tue, Feb 21, 2012 at 11:27 AM, Leonard J Delmolino <ldelmolino@comcast.net> wrote: We have one income item for 2011 that is categorized as Hi Len, Yes. This will affect some of your reports. It would affect the cost basis of the investment. Sometimes, distributions you have received during the year are "re-classified" from dividends to return of capital distributions. Companies have to have a certain level of earnings and profits to support a distribution being considered a dividend. If they don't it has to be changed to a return of capital distribution. They may not find this out until they close their books at the end of the year. If you have an investment where this is the case, you will need to manually edit your original dividend entries and split them into 2 parts. One for whatever is still being considered a dividend and the other for the part that is considered a return of capital. Dividends are current year taxable income. Returns of capital will impact your cost basis and will not be currently taxable unless they would reduce it below zero. -- Laurie Frederiksen Invest with your friends! www.bivio.com Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio Hi Laurie - thanks for the prompt response! The transaction in question originally came through as a dividend - however, it was classified as "Return of Capital" on our 1099. After discussing with TD Ameritrade to verify, I re-classified the transaction to "Return of Capital". Sure enough, the cost basis for the stock (which we still hold) was reduced by the "Return of Capital" amount. Problem solved - we're all set - thanks so much for your help! I also have a "Reduction to Basis" on my 1099 this year; is that the same as "Return of Capital"? Thanks for all your help! Rich Williams On Tue, Feb 21, 2012 at 6:56 PM, Richard W. Williams wrote: I also have a "Reduction to Basis" on my 1099 this year; is Dear Rich, It depends what it is coming from. If you'd like to email your 1099 to support@bivio.com, we can take a look at it for you. -- Laurie Frederiksen Invest with your friends! www.bivio.com Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio |
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