Return of Capital
/ˈrɪtɜrn ʌv ˈkæpɪtl/
Definitions
- (n.) The repayment or distribution of an investor's original invested funds, distinct from earnings or profits.
The company issued a return of capital to its shareholders to reimburse part of their initial investment.
- (n.) A corporate distribution that reduces the basis of a shareholder’s stock rather than being taxed as dividend income.
Because the payment was a return of capital, the shareholder’s cost basis was adjusted downward.
Forms
- return of capital
Related terms
See also
Commentary
In drafting, clarify whether a return of capital is taxable or non-taxable to avoid shareholder confusion.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.