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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )
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To: Ira Player who wrote (4555)2/10/2004 3:04:32 PM
From: HIA  Read Replies (1) of 5810
 
The dividend is payable to those who owned the stock on Feb 5. That means that someone could buy the stock on Feb 5, sell the stock on Feb 6, and they would receive the dividend when it is paid. That also means that the market demand for the stock should adjust the price of the stock on Feb 6. Since the price of the stock did not adjust for the dividend, the dividend appears to be a return-of-capital. In fact there is a company press release that casually mentions a return of capital.

A return of capital is not income but a reduction in the cost basis of the holding...
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