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Level 1
posted Feb 13, 2020 11:47:02 AM

Return of Capital default distribution on bond

I received a partial distribution of a return of capital from a court ordered settlement on a bond in default.  The bond is not yet worthless.  The proceeds were reported on form 1099-B.  How is the income treated?

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1 Replies
Expert Alumni
Feb 13, 2020 12:36:45 PM

I return of capital would not be taxable; however, you still need to report the Form 1099-B.  If properly coded, you won't owe any tax on the distribution.