Barry Margolin <barmar[at]alum.mit.edu> writes:

- quote -

That's not true. Return of capital distributions absolutely
*do* reduce your basis by the amount of the distribution.

--
Rich Carreiro rlcarr[at]rlcarr.com

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Barry Margolin <barmar[at]alum.mit.edu> wrote:

- quote -

Strongly disagree.

Steve

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Bill Brown <brownwp[at]longwood.edu> wrote:

- quote -

I agree, although there's the unlikely scenario that the
non-dividend distribution exceeded the original basis.
In that case, the excess would become capital gain.

Steve

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article
<46a26bc0-03e1-4625-b71d-0123f5bbc4be[at]g3g2000pre.googlegroups.com> ,
kmnugent[at]hotmail.com wrote:

- quote -

It doesn't matter whether you reinvest or not, distributions don't
affect the cost basis of your original shares.

When you reinvest, you increase the cost basis of your entire holding.
As far as taxes are concerned, reinvesting is the same as receiving a
check and purchasing shares on the same date as the distribution. Since
you now own more shares, the cost of the shares (which is the same as
your distribution) is added to your total cost basis.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Feb 14, 4:08*pm, kmnug...[at]hotmail.com wrote:
- quote -

your basis.

The non-dividend portion did decrease your basis but you increased it
again by the same amount by reinvesting the non-dividend portion. It's
a wash.

The net effect is your basis (from before the distributions) increased
by the dividend portion of those distributions.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Dear NG:
I've re-invested the monthly dividends from a mutual fund which,
according to my 1099 DIV, turned out to be partly Nondividend
Distributions.

Am I correct in my assumptions that since I've re-invested the
dividend/nondividend distribution that it does NOT reduce my basis?
ANd dhd I NOT re-invested, then myasis would be reduced by the
nondividend distribution?

Thanks in advance for any insights.

-Kevin

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >