Return of capital (ROC) refers to payments back to “capital owners” (shareholders, partners, unitholders) that exceed the growth (net income/taxable income) of a business. The ROC effectively shrinks the firm’s equity in the same way that all distributions do. It is a transfer of value from the company to the owner. Since the ROC shrinks the business and represents a return of the investors’ own money, the ROC payment received may not be taxed as income. Instead it may reduce the cost base of the asset. This results in higher capital gains when the asset is sold, but defers tax.

With such a function,  Trademax makes it easier to better adjust the cost basis of the stock by that amount.

  1. Select the record to which you want to record Return of Capital

  2. Learn more about: How to select trade records.

  3. Right-click on the selected record and select the Event Append in the context menu, then choose Return of Capital in the dropdown list:
  4. A dialog box will pop up:
  5. Function
    1. Enter Transaction

    There are two options in the dropdown list:  Return of Capital and Div Paid on ShortSales. The default type depends on your choice in the previous step.

    2.Transaction Date The payment date when the company expects the capital payment process to complete. You can manually enter the date or choose from the dropdown calendar to set the Transaction Date.
    3. Event Date The recorded date when the company initiates the capital payments to shareholders of record. You can manually enter the date or choose from the dropdown calendar to set the Event Date.
    4.Account The account name to which the specific security belongs. Choose the specific account name from the accounts list.
    5.Security Name The name of the specific security
    6.Amount Manually enter the quantity of the capital
    The description of the security is displayed automatically
  6. After checking the information, click the OK button to continue the process. You will see the following grid:
  7. As you can see from the above picture,, the new record is generated automatically.

  8. You can cancel this action with the Undo Button in the trade tab.