Corporate distributions to shareholders that represent a nontaxable return of capital are those that are:

Question

Quizplus · Accepted Answer

Corporate distributions to shareholders that represent a nontaxable return of capital are made from the excess over earnings and profits of the corporation, meaning that they are not attributable to the corporation's current year's profits or accumulated retained earnings. These distributions are typically considered a return of the shareholder's investment in the corporation, rather than a distribution of the corporation's earnings or profits.

Corporate Distributions to Shareholders That Represent a Nontaxable Return of Capital