Forgive my ignorance, but a couple of PLCs have come up as I’ve been screening to add a stock in my traditional IRA. UL and AY both seem to meet criteria I am looking at but I am not sure of the tax issues of a PLC in such an account. I have a few Canadian stocks, but that is different, right? Any info would be appreciated.
SBN
We hold AY in a taxable account. The “dividend” is treated as a “return of capital” and reduces your tax basis so that the tax impact is on LT capital gains on sale of stock rather than annual income. I wouldn’t hold it in a TIRA for sure, since any assets taken out of a TIRA is treated as ordinary income.
IP
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PLC is Public Limited Company, the British equivalent of an inc. or corporation (corp).
I own Atlantica Infrastructure (AY) in both a taxable account and in my Roth IRA accounts.
As noted earlier, the dividend is typically a “return of capital” so one doesn’t get the additional tax benefit of adjusting one’s cost basis. But the dividend is still tax-free in the Roth ac. YMMV.
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One other data-point - the dividend isn’t always 100% Return-of-Capital.
In 2021, my broker report shows only 84.33% of the payout was return-of-capital. The rest was a qualified dividend
In 2020, the dividend was 100% return-of-capital
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