Someone please be kind enough to correct me as I do my own taxes and have not encountered a stock like this before.
Our 2013 "dividends" turn out to be entirely a return of capital. Thus in my tax return for 2013 I will pay no taxes on them. My broker Etrade will, however, reduce my LNCO cost basis by the amount of the return of capital. At some point in the future if I sell my stock for what I paid for it that year I will have a capital gain equal to the cumulative amounts of ROC.
Assuming I hang onto LNCO for over a year, as I expect to, this is to my benefit. I pay my taxes later instead of now. I also pay at the long term capital gain rate instead of the non-qualified dividend rate.
Does I has it right or is I full of u know what?
Heres what you do...when entering on your dividend you enter the information off the 1099div you receive...the net result will be zero asi 100% is roc....the divys you rec'd in 2013 will be treated as a reduction in your cost so when sold you have a larger capital gain as your roc divys reduce your original cost ...if you are using turbo tax just enter the info right off the 1099div
Does it benefit the company in some way to declare the distributions ROC instead of dividends? Seems like it would be simpler if they were dividends, and simple tax prep is probably the reason most chose LNCO over LINE
Yes, a 9.3% return with no taxes due. I really cannot understand why more people do not own this stock.
You will need to make sure your broker does adjust your basis though.
Sentiment: Strong Buy
That's not much return if it's your own capital paid out. The key original question was "if I sell my stock for what I paid for it". Either the enterprise must generate a real return someday or you need to find a greater fool.