Filling taxes for stocks with ROC (Return of Capital) tax structure

taxpayer101
taxpayer101 Member Posts: 1 Newcomer
in General

I'm planning to open a new position in QQQI, from what I'm reading it's taxed as a ROC.

From my understanding, I would not owe any taxes at the end of the year on the ROC portion unless if I sell my shares. If I do not sell my shares the cost basis keeps going down until it reaches zero, then each year I would owe taxes on the distributions paid.

When it comes to filling taxes, I've been manually filling out the numbers based on what the brokers send me on FreeTaxUSA. If I open a position on QQQI, do I need to manually keep track of the cost basis going down each year? or does the broker or FreeTaxUSA keep track of that?

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Answers

  • MatthewD
    MatthewD FreeTaxUSA Team Posts: 675 image
    Hi taxpayer101,

    Thank you for joining the tax forum. You are correct in that you do not report anything on your taxes unless you sell or you have gains from dividends.

    Since we are a tax forum and deal with tax questions and not investment strategies, we really have little to say on this topic.

    The FreeTaxUSA software only keeps track of something you report as a sale from a broker. Then the sale would be reported on Form 8949 and this really isn't a tracking system for the cost basis for an ROC. You would be better using a stockbroker to track the basis for your ROC. I also, suggest you find a stock forum to see if others have experience and suggestions.

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