1099-B, Principal Payment

[Janitor Bob]

OK...never had this before, Client has 1099-B with one entry. Undetermined Term, Non-covered. Gross Proceeds are 1,046.04 with no cost /basis listed. Note states "Principal Payment"

what is this and how do I get the cost/basis?

the CUSIP (30290A178) is for Canadian Energy and Income Fund (Cash-Fee) that was terminated

[jklcpa]

It's a return of capital. You report it on the Sch D so you tie in to the 1099-B and generally would use the same amount for the cost basis so there is no gain or loss. You reduce the basis in the investment by the principal amount received. Remember though that you can't reduce basis below zero. As an example, if your client had a basis of $10,000 immediately before this payment, his basis is reduced by the $1046.04 and his new basis is then $8953.96.

[Janitor Bob]

Thanks...from my research, this is what I suspected...I had just never had it before. Client's basis was only slightly more than this distribution and she received the remainder earlier this year when the fund was terminated