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Apollo Commercial Real Estate Finance, Inc. Message Board

  • RealBeauMec RealBeauMec Feb 4, 2003 3:55 PM Flag

    Dividend taxability

    I notice that 43% of 2002's dividend is a nontaxable return of capital. Any opinions on whether this development is of any significance from an investment point of view?

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    • <I notice that 43% of 2002's dividend is a nontaxable return of capital>

      The ROC portion of the dividend is taxable, but when the stock is sold. The ROC is subtracted from your purchase price (basis) when declaring capital.

      REITS with a substantial ROC component should be purchased in a taxable account. In a tax deferred account (IRA), the ROC portion will be taxed as income when withdrawn.

      The importance of this distinction depends on your tax bracket.

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