Tax & EvaluationCâu 95 / 110
A fund makes a distribution characterized as a return of capital. The immediate effect on the shareholder is:
a.Ordinary income tax on the full amount
b.A long-term capital gain equal to the distribution
c.An increase in the shareholder's cost basis
d.A reduction in the shareholder's cost basis, with no current tax
Giải thích
A return of capital is the investor's own money coming back, so it is not currently taxable but it lowers basis, which increases the taxable gain on a later sale. Once basis reaches zero, further return of capital distributions become taxable gain. Treating it as income or as a current capital gain double counts the tax.
Trích dẫn luật: Internal Revenue CodeLuyện miễn phí toàn bộ 110 câu hỏi — không cần đăng ký.
Câu hỏi liên quan cùng chủ đề
- An investor bought fund shares four months ago and now receives a capital gains distribution from the fund. How is that distribution taxed?
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