On June 1, 2020 Jerry Driggs acquires 2,500 units of the Belle Realty Trust at $12 per unit. During September, 2020, the trust makes a distribution of $1.50 per unit, of which $1.00 represents a return of capital. Mr. Driggs decides to reinvest the entire distribution at a cost of $12.50 per additional unit. What are the tax consequences to Mr. Driggs of the 2020 distribution and its reinvestment? What will be his adjusted cost base per unit after the reinvestment?

Question

Quizplus · Accepted Answer

The Answer of On June 1, 2020 Jerry Driggs acquires 2,500 units of the Belle Realty Trust at $12 per unit. During September, 2020, the trust makes a distribution of $1.50 per unit, of which $1.00 represents a return of capital. Mr. Driggs decides to reinvest the entire distribution at a cost of $12.50 per additional unit. What are the tax consequences to Mr. Driggs of the 2020 distribution and its reinvestment? What will be his adjusted cost base per unit after the reinvestment?

On June 1, 2020 Jerry Driggs Acquires 2,500 Units of the Belle