Could a CFP tell me what the different between "Good" and "Bad" return of capital means? I just had a call from one of my sales staff on this and, to be honest, I have no idea what they are talking about.
It's very technical jargon and best left to the experts (so I doubt any CFP practitioner understands, unless, of course, they are also a CFA candidate).
Sorry Willy...but you should just play along when you are asked those questions.
"good" return of capital is when some crazy accountants figure out a way to classify the distribution from the company as return of capital... thus you pay no taxes (but it theoretically lowers your cost basis... oops did i forget to adjust that?). Hopefully, that capital isn't really capital but cashflow.
"bad" return of capital is when a company's distribution is larger than cashflow and is returning your own capital just to be cute and sport a large dividend.
This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
By continuing to use this site, you are consenting to our use of cookies.