Two Harbors Investment Corp. (NYSE: TWO) today
announced the tax treatment of common stock and preferred stock
dividends declared in 2017. This information is provided to assist
stockholders with tax reporting requirements related to dividend
distribution of taxable income by Two Harbors Investment Corp.
Stockholders should review the 2017 tax statements received from
their brokerage firms or other institutions to ensure that the
statements agree with the information provided below. Additionally,
as each stockholder’s tax situation may be different, stockholders
are encouraged to consult with their own professional tax advisor
with respect to their individual tax consequences.
Tax Treatment of the Common and Preferred
Distributions
The Federal income tax classification of the company’s 2017
common and preferred stock distributions as it is expected to be
reported on Form 1099-DIV is set forth in the following tables. No
portion of the company’s 2017 dividend distributions is expected to
consist of unrelated business taxable income (UBTI), which is
subject to special tax reporting for certain tax exempt
investors.
2017 FORM 1099 –
Common Stock Box 1a Total Box 2a Total Box 3
Total
2017 Total 2017 2017 Capital 2017
Distribution Declaration
Record
Payable
Distribution Ordinary Gain Nondividend
Type Date
Date
Date
Per Share Dividends Distributions
Distributions Cash 03/14/2017 03/31/2017 04/27/2017
$0.250000 $0.090687 $0.000000 $0.159313 Cash 06/15/2017 06/30/2017
07/27/2017 $0.260000 $0.094315 $0.000000 $0.165685 Cash 09/14/2017
09/29/2017 10/27/2017 $0.260000 $0.094315 $0.000000 $0.165685
Granite Point Common Stock 09/14/2017 10/20/2017 11/01/2017
$1.779688 $0.645581 $0.000000 $1.134107 Cash 12/14/2017 12/26/2017
12/29/2017 $0.470000 $0.170492 $0.000000 $0.299508
Totals
$3.019688 $1.095390 $0.000000 $1.924298
2017 FORM 1099 – Preferred Series A
Box 1a Total Box 2a Total Box 3 Total
2017 Total
2017 2017 Capital 2017 Distribution
Declaration Record Payable Distribution
Ordinary Gain Nondividend Type
Date Date Date Per Share
Dividends Distributions Distributions Cash
06/15/2017 07/12/2017 07/27/2017 $0.750430 $0.750430 $0.000000
$0.000000 Cash 09/14/2017 10/12/2017 10/27/2017 $0.507810 $0.507810
$0.000000 $0.000000
Totals $1.258240 $1.258240 $0.000000
$0.000000
2017
FORM 1099 – Preferred Series B Box 1a Total Box 2a
Total Box 3 Total
2017 Total 2017 2017
Capital 2017 Distribution Declaration
Record Payable Distribution Ordinary
Gain Nondividend Type Date Date
Date Per Share Dividends Distributions
Distributions Cash 09/14/2017 10/12/2017 10/27/2017
$0.518920 $0.518920 $0.000000 $0.000000
Totals $0.518920
$0.518920 $0.000000 $0.000000
The company declared dividends with respect to its Series A,
Series B and Series C preferred shares on December 14, 2017. The
record date for stockholders entitled to receive each of these
preferred dividends was January 12, 2018. Accordingly, these
preferred dividends will be taxable to stockholders in the 2018 tax
year.
Pursuant to the Internal Revenue Code of 1986, as amended,
dividends declared by a real estate investment trust (REIT) during
the last three months of a calendar year that are payable to
stockholders of record on a specified date in such three month
period, but which are actually paid during January of the following
calendar year, are considered paid on December 31st of the calendar
year in which the dividends were declared, to the extent of the
REIT’s distributable earnings and profits.
Tax Treatment of the Granite Point Stock Distribution
On November 1, 2017, the company distributed the 33,071,000
shares of Granite Point Mortgage Trust Inc. (NYSE: GPMT) (“Granite
Point”) common stock it had acquired in connection with the
contribution of its commercial real estate portfolio to Granite
Point. Two Harbors common stockholders who were entitled to take
part in this distribution received 0.094765 shares of Granite Point
common stock for each share of the company’s common stock
outstanding on October 20, 2017, subject to the liquidation of
fractional shares for which stockholders received a payment of cash
in lieu of such fractional shares.
The company reports the distribution of Granite Point common
stock as a taxable distribution for U.S. federal income tax
purposes. Common stockholders will be treated as receiving a
distribution equal to the fair market value of the Granite Point
common stock (and cash in lieu of fractional shares of such common
stock) received in the distribution and will take an adjusted tax
basis, for federal income tax purposes, in such shares equal to the
“fair market value” of such shares based on the market price on the
distribution date. For federal income tax purposes, the fair market
value of the Granite Point common stock is the closing price on
November 1, 2017, which was $18.78 per share.
Tax Treatment of the Reverse Stock Split
On November 1, 2017, immediately following the Granite Point
common stock distribution, the company completed a one-for-two
reverse stock split of the outstanding shares of Two Harbors common
stock (“Reverse Stock Split”). Pursuant to the Reverse Stock Split,
every two (2) shares of issued and outstanding common stock were
converted into one (1) share of common stock. As a result,
stockholders must allocate the aggregate tax basis in their shares
held immediately prior to the Reverse Stock Split among the shares
held immediately after the Reverse Stock Split (including any
fractional shares for which cash was received). In addition, any
stockholder who was entitled to receive a fractional share as a
result of the Reverse Stock Split instead received cash in lieu
thereof and was deemed for federal income tax purposes to have
received and then immediately sold such fractional share for
cash.
Issuers of corporate securities are required to complete
Internal Revenue Service Form 8937 to report organizational
actions, including reverse stock splits, that affect the basis of
the securities involved in the organizational action. Stockholders
are encouraged to review Form 8937 for the federal income tax
treatment of the reverse stock split. The 2017 Two Harbors IRS Form
8937, Report of Organization Actions Affecting Basis of Securities,
is provided under the “Investors” and “Dividend History” section of
the Two Harbors website.
Nondividend Distributions Affecting Basis in Two Harbors
Common Stock
The federal income tax classification of the 2017 nondividend
distribution is reported on Form 1099-DIV in box 3. The nondividend
distribution has the effect of reducing the basis of a
stockholder’s shares of Two Harbors common stock. If a stockholder
has fully recovered his, her, or its basis in their Two Harbors
common stock, a nondividend distribution may be treated as a
capital gain.
Issuers of corporate securities are required to complete
Internal Revenue Service Form 8937 to report organizational
actions, including nontaxable distributions, that affect the basis
of the securities involved in the organizational action. The 2017
Two Harbors IRS Form 8937, Report of Organization Actions Affecting
Basis of Securities, is provided under the “Investors” and
“Dividend History” section of the Two Harbors website.
Consult Your Tax Advisor
Stockholders may have additional reporting obligations to the
Internal Revenue Service and/or other tax authorities.
The U.S. federal income tax treatment of holding Two Harbors
common and preferred stock to any particular stockholder will
depend on the stockholder’s particular tax circumstances. You are
urged to consult your tax advisor regarding the U.S. federal,
state, local and foreign income and other tax consequences to you,
in light of your particular investment or tax circumstances, of
acquiring, holding and disposing of Two Harbors common and
preferred stock.
Two Harbors does not provide tax, accounting or legal advice.
Any tax statements contained herein were not intended or written to
be used, and cannot be used for the purpose of avoiding U.S.,
federal, state or local tax penalties. Please consult your advisor
as to any tax, accounting or legal statements made herein.
Two Harbors Investment Corp.
Two Harbors Investment Corp., a Maryland corporation, is a real
estate investment trust that invests in residential mortgage-backed
securities, mortgage servicing rights and other financial assets.
Two Harbors is headquartered in New York, New York, and is
externally managed and advised by PRCM Advisers LLC, a wholly owned
subsidiary of Pine River Capital Management L.P. Additional
information is available at www.twoharborsinvestment.com.
Additional Information
Stockholders of Two Harbors and other interested persons may
find additional information regarding the company at the Securities
and Exchange Commission’s Internet site at www.sec.gov or by
directing requests to: Two Harbors Investment Corp., 590 Madison
Avenue, 36th floor, New York, NY 10022, telephone 612-629-2500.
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version on businesswire.com: http://www.businesswire.com/news/home/20180122006558/en/
Two Harbors Investment Corp.Investors:Margaret Field,
212-364-3663Investor
Relationsmargaret.field@twoharborsinvestment.com
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