How to handle return of principle

[Jeff]

How does one handle a return of principle in an investment account? Also as
far as assigning a tax line to it: does it go to Schedule D?

--

Jeff Stevens
Email address deliberately false to avoid spam
jeff@stevens.com

[The Michael]

On Thu 10 Feb 2005 03:27:55p, Jeff wrote in
news:yuQOd.42777$NC6.7938@newsread1.mlpsca01.us.to.verio.net:
How does one handle a return of principle in an investment account? Also as far as assigning a tax line to it: does it go to Schedule D?

I believe it is Rtncap; Automatically adjusts the cost basis of your
holding, so "automagically" shows up just when and where it should on
Schedule D if you sell that holding someday.

--
Mike

[Charlie48K]

A return of principle reduces the cost basis. It's not reported on your
taxes as it's not income or capital gain.

[Jeff]

Thank you. That is what I thought.

--

Jeff Stevens
Email address deliberately false to avoid spam
jeff@stevens.com


"Charlie K" <Chas_K@excite.com> wrote in message
news:1108075577.812098.100370@c13g2000cwb.googlegroups.com...A return of principle reduces the cost basis. It's not reported on your taxes as it's not income or capital gain.

[A Count]

> How does one handle a return of principle in an investment account? Also as far as assigning a tax line to it: does it go to Schedule D?

Return of capital reduces the cost basis. It is not a dividend but a
deposit.

Instead of reducing basis it would be the same net to increase future sale
proceeds...

[Geezer]

"A Count" <acount@notmail.com> wrote in message
news:OpWOd.29305$by5.26313@newssvr19.news.prodigy.com... How does one handle a return of principle in an investment account?
Also as far as assigning a tax line to it: does it go to Schedule D? Return of capital reduces the cost basis. It is not a dividend but a deposit. Instead of reducing basis it would be the same net to increase future sale proceeds...

My understanding is that the sales price reported on Schedule D should
always match that reported on the 1099-B. If the 1099-B only lists the
gross sales price, one should not subtract the sales commission and fees
from the sales price but rather should add them into the reported basis. By
this logic, one should not address a return of principal by "increase future
sale proceeds...", but rather always by reducing the basis. Gary Q

[A Count]

> My understanding is that the sales price reported on Schedule D should always match that reported on the 1099-B. If the 1099-B only lists the gross sales price, one should not subtract the sales commission and fees from the sales price but rather should add them into the reported basis. By this logic, one should not address a return of principal by "increase future sale proceeds...", but rather always by reducing the basis. Gary Q

Sure but forget tax instructions and consider fundamental accounting. The
basis should be adjusted so that the portfolio unrealized gain/loss
accounting reflects the situation.