Unit Investment Trusts are often abbreviated to UIT on your brokerage firm statements. UIT's are trust entities which are established to hold securities which are not actively managed. The trustee simply collects interests, dividends, sales proceeds, and principal repayments and distributes the cash pro-rata to the UIT investors.
Unit Investment Trusts holding bonds are often sold at a premium to the par value of the bonds held inside the UIT.
Your Form 1099-B at year-end will list all the principal repayments you received from UIT's that year. The way to report these on your tax return is simply to follow the same method as in the case of a bond bought at a premium. If it is a UIT holding a taxable bond portfolio, follow the rules for premiums on taxable bonds. If it is a municipal bond portfolio inside the UIT, follow the rules for premiums on tax-exempt bonds.
Don't just report the principal repayment amount as your cost basis for a taxable bond UIT! You end up losing the tax savings you are entitled to claim from the premium you paid for the UIT.
You have basis! Use it!
Click on the image below to access our Return of Principal Calculator
Return of Principal Calculator
Did we answer your question? If not, try this:
Custom Search
Information provided is intended solely for U.S. individual cash-basis taxpayers and is believed to be accurate for most cases. Always consult your personal tax advisor about your own situation. Suggestions are most welcome. Please e-mail webmaster @ costbasis.com or write to us at P O Box 11022, Chicago IL 60611 with your comments.
� costbasis.com, Inc., 2008-2009. All rights reserved.
