It IS a bit annoying - during the year, the dividends that mutual funds pay are merely listed as "dividends"; I have to wait for the yearly 1099-DIV to find out how much of the "dividend" is actually RoC or "Nondividend Distributions"
On Mon, Mar 31, 2025 at 11:37 AM Kalpesh Patel <kalpesh.pa...@usa.net> wrote: > You are correct that they need to issue a 1099 by mid-February which is > caveated that it is preliminary one, and final one coming later when they > have handle on RoC. > > Unless I am mistaken here, on 1099-DIV they provide RoC on line 3) > Nondividend Distributions. Even if the distribution of RoC is more > frequent than yearly, it would be denoted in the accompanying statement > as such. I guess it ultimately dependent on servicer, and their process how > they handle it. I normally see RoC play out in REIT mutual funds more > often than not, but I also see it in investments available to accredited > investors. > > -----Original Message----- > From: John Ralls <jra...@ceridwen.us> > Sent: Sunday, March 30, 2025 7:46 PM > To: stepbystepf...@comcast.net > Cc: gnucash-user@gnucash.org > Subject: Re: [GNC] Return of capital, lots & accurate gains > > > > > On Mar 30, 2025, at 12:32 PM, Michael or Penny Novack via gnucash-user < > gnucash-user@gnucash.org> wrote: > > > > On 3/30/2025 3:16 PM, Kalpesh Patel wrote: > >> > >> I was under the understanding that the effect of return of capital > (RoC) is that the capital gains get postponed until when you sell the > commodity, and that the cost basis gets reduced by it when RoC is > distributed. > >> > >> In the States, the financial servicer should not be sending a dividend > statement, and re-characterize it as a RoC at another time - they are two > different things and are treated differently for the tax purposes. > >> > >> I normally go back to the original purchase transaction and readjust > the cost basis for them. It does become a bit cumber some if multiple lots > are involved but I believe that is the correct treatment of it. I welcome > weigh in from pro's than I am. > > > > Correct ---- You debit cash (for the check received) and credit the > basis. LATER (when eventually sold) will affect capital gains since you > subtract the (remaining) basis from the sale price. > > > > However -- terminology can be historic, so a return of capital > distribution is still called a "dividend". Perhaps because at the corporate > level the same rules apply? << becomes a liability when declared by the > BOD, that is almost certainly well before the date when to be paid out.>> > > The following is a totally USA perspective. I have no idea if other > countries even allow returns of capital: > > I think it depends on the type of security. If the investment sends you a > K-1 then it can do returns of capital. If it sends (or causes your broker > to send) a 1099 then it pays a dividend or interest. > > A return of capital isn’t a capital gain, it’s a reduction in basis, at > least in theory and only until they’ve given you back all of your > investment. Once that happens then it turns into ordinary income. > > But things get messy when you invest in a mutual fund that in turn invests > in private equity or master limited partnerships. K-1s aren’t due until the > end of February (and I’ve gotten them as late as mid-March). Until the fund > gets the K-1s and runs the numbers it doesn’t know how much of what it paid > to its customers in the last year was RoC… but it had to issue the 1099s by > mid-February so they have to issue revised ones after they’ve punched in > the K-1 numbers. > > Regards, > John Ralls > > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. > -- _________________________________ Richard Losey rlo...@gmail.com Micah 6:8 _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
