Tax Questions

What are nondividend distributions of a stock?


What are Nondividend stock distributions?

A nondividend distribution of a stock is a distribution that is not paid out of the earnings and profits of a corporation, like dividends are.


Should I receive a 1099 DIV for nondividend distributions?

You should receive a Form 1099 DIV for nondividend distributions or similar statement from the corporation showing the nondividend distributions or a stock. If you receive the 1099 DIV form for nondividend distributions, the nondividend distribution amount will be shown in box 3 of the 1099 DIV form.

What to do if I didn't receive the 1099 DIV form for nondividend distributions?

If you did not receive the 1099 DIV form for your nondividend distributions then report the distribution as an ordinary dividend distribution instead of a nondividend distribution.


What are the tax consequences nondividend distributions?

Nondividend distributions reduce the basis of the stock. Nondividend distributions are not taxed until your basis in the stock is fully recovered. The non taxable portion of the nondividend distribution is called a return of capital.