How does one handle a nondividend distribution (for tax pruposes)?

Question

For the first year, it seems that one of the companies I own for the dividend yield has decided to toss something called 'nondividend distribution' and my wonderful stock company doesn't clarify which stock it belongs too.. and I looked through nearly all the dividend 'statements' that they give out on a monthly basis and am unable to find which company gave out this non-dividend distirbution. Do I have to start doing a 'dial a number' to find which company might want to own up to this amount? I've now sold ALL my stocks in these companies, can I just count this as a dividend or capital gain and move on? Thanks

For your information, this was LAST year, I'm trying to file an admended before the new year (which then I get to pray I don't see this again). The dividends are from funds but their websites do not help me spot which of these were the culprit. The three funds were FRO; ARK; HYB
And yes, my wonderful stock company DOES NOT have a detailed capital gains stuff, I had to manually calculate alot of stuff on my previous return hence the reason for the admend.

Answer 1

Your 1099 packet will explain everything (once you have waded through about 20 pages of bumph). They should put one in the mail to you by January 31st. Narrow your search to mutual funds and REITs first. They are more likely to pay non-dividend distributions. An internet search of each company's website will tell you.

The distribution is a reduction of your basis for capital gains. It would be easy to say that you could just treat this as a standalone capital gain, but that may give you tthe wrong result on your Schedule D.

Wait until you get your 1099 packet if you possibly can and make sure your brokerage gives you a detailed capital gains statement.

Edit: OK, so you're talking 2005?
Frontline Ltd: The non-dividend distribution is a return of capital. It is only taxable when you sell the shares. You have to deduct the non-dividend distribution from the cost of the shares when you sell.

Blackrock High Income Portfolio: Ditto

New America Fund: Scant information. Call them and ask.

Your broker is not up to much if he cannot give you a cost history. Ask them why not. If the answer is not acceptable, switch brokers.

Frankly, I think you need professional assistance doing your tax returns.

Answer 2

It could be "Return of Capital".

In that case it would not be taxable, it would just reduce your basis. If it reduces your basis past zero, then that amount is subject to Capital Gains.