Is Return of Principal taxable?

[arantes13]

The return of principle is not taxable. The IRS considers these monies return of the cost on an investment and as such, it is not recognized as income. Hope it helps!!

[bwa]

Return of principal is not taxable until it exceeds your cost or basis in the asset.

[ookla22000]

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?

[yunpingzhu]

But I have some 50% loss of principal (may had some interest payment before return of partial principal). Where should I log my loss in Turbo tax under business section for 2020?

[ErnieS0]

@yunpingzhu Did you sell something? If you received less money than you invested, then you can claim a loss when you sell your investment.

If your investment is worth 50% of what you invested, but you did not sell, then you cannot claim a loss until you sell.

[brichardson4567]

How do we book a return on principal?  What are the entries?

[Opus 17]

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@brichardson4567 wrote:

How do we book a return on principal?  What are the entries?

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I think you want to be asking on the Quickbooks forum,

https://quickbooks.intuit.com/#