For a long investment, when a portion of the quantity (for a bond) or net amount (for a stock) of an investment is returned to the buyer. Returns of capital are tax-exempt distributions and reduce cost basis of an investment to a maximum of zero. Below zero, any additional returns of capital are treated as capital gains distributions and are taxable.
The company decides to return a portion of the equity capital in form of cash. It is often a result of Capital Reduction.
A cash distribution resulting from, among other things, the sale of a capital asset, sale of securities, or tax breaks from depreciation.
Money paid to you on the money you invested.
Generally, return of capital refers to the recovery of all or part of an investor's original investment in an asset. The amount of capital returned reduces the investor's acquisition cost basis in the asset by that same amount. Although returns of capital are generally not directly taxable in themselves, they may result in higher capital gains tax liability later on if they do in fact reduce the cost basis in the asset.
A distribution that is not paid out of earnings and profits. It is a return of the investor's principal.
a distribution that is not paid out of the earnings and profits of a corporation
a return of some or all of your investment in the stock of the company
A distribution that is not out of earnings and profits is a return of the amount, or capital, that was invested in the mutual fund. Returns of capital are not taxed as ordinary dividends, and are sometimes called tax-free dividends or nontaxable distributions. Distributions that are a return of capital reduce your cost basis.
A cash distribution resulting from the sale of a capital asset, or securities, or tax breaks from depreciation which is normally tax-free.
Getting back the money you put into an investment. This is not taxed.
A fund distribution that exceeds earned income - that is, a distribution that includes a portion of the investor's original principal. Return of capital is sometimes distributed to maintain the level of the distribution when income is not adequate to do so.
A distribution of cash resulting from depreciation tax savings, the sale of a capital asset or of securities in a portfolio, or any other transaction unrelated to retained earnings.
A return from an investment that is not considered income. The return of capital is when some or all of the money an investor has in an investment is paid back to him or her, thus decreasing the value of the investment. This is not a gain of any type because it is not in excess of the original investment.
Return of capital (ROC) refers to payments back to "capital owners" (shareholders, partners, unitholders) that exceed the growth (net income/taxable income) of a business. It should not be confused with return on capital which measures a 'rate of return'.