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How Are Nondividend Distributions Taxed? | The Basis Rule That Bites

Nondividend distributions usually aren’t taxed when paid, but they reduce your cost basis and can turn into capital gains once basis hits zero. You open your brokerage statement, spot “nondividend distribution,” and your brain goes, “Wait… is this income or not?” Fair question. The answer lives in one place: your cost basis. A nondividend distribution

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