You have discussed tax rules but not the specific taxability of the ORI dividend. When a company has distributed all of its "earnings and profits"(a tax accounting term that is similar to retained earnings) any further dividends are considered Nondividend Distributions (aka return of capital). I checked with Charles Schwab and the ORI dividend in 2011 was considered qualified. What I am trying to figure out is when will ORI run out of earnings and profits such that the dividend will be considered a return of capital. If and when that happens you don't report the dividend as current income and instead you reduce your cost basis and report a larger gain(hopefully) when the stock is sold.