Tax Considerations of Dividends Paid on Capstead Stock
As a real estate investment trust (“REIT”), Capstead distributes all, or nearly all, of its taxable income to its stockholders. Generally, Capstead dividends are characterized as ordinary income, capital gain, or return of capital and do not qualify for the 15% reduced dividend tax rate enacted as part of the Jobs and Growth Tax Relief Act of 2003. Stockholders will be notified of the proper tax characterization of Capstead dividends by way of IRS Form 1099-DIV following the close of each tax year. Capstead dividends received by corporate stockholders are not eligible for the corporate dividends-received deduction. If Capstead dividends are characterized as return of capital, stockholders should reduce the tax cost basis of their shares by the amount of return of capital distributions received. Stockholders should generally report return of capital distributions received in excess of tax cost basis as capital gain income. Due to the complex nature of the applicable tax rules, it is recommended that stockholders consult their tax advisors to ensure proper tax treatment of dividends received.
Preferred Class E Stock
Each quarterly dividend paid will generally consist of ordinary taxable income and will not qualify for the reduced dividend tax rate.
The following links provide tax characterization of Capstead’s common dividends since 1996, the year of Capstead’s initial return of capital distribution, as well as tax characterization quarterly since 2000.