If you receive a "return of principal", don't you have to reduce your basis by that amount when you sell the shares? Example: I bought shares for 20K, I got a $3000 return of principal, and then I sold all my shares for $12K. My broker's 1099 shows that "gross proceeds" of $3000 as one entry, then the sale of shares as another entry. Both are "noncovered", so broker reports no basis, but I assume my basis at time of sale would be 23K, so I lost $11K on the final disposition of shares.
My broker put a comment on the 1099-B that this was an "ORDINARY LOSS", which I am leery of reporting that way...why is is not a capital-loss?
