How do I report a return of capital on my tax return?

Return of capital represents a return of part of your investment in company stock and is usually not shown anywhere on your tax return. Return of capital is usually shown as nontaxable distributions in Box 3 of your 1099-DIV. This distribution reduces the basis of the stock, and is not taxed until your basis in the stock is fully recovered. However, any return on capital in excess of basis is treated as a capital gain on your tax return.