Nontaxable Return of Capital
BGC Partners intends to pay not less than 75 percent of its post-tax distributable earnings per fully diluted share as cash dividends to all common stockholders. The Company also intends to use the balance of its quarterly post-tax distributable earnings, after distributions to all partnership units and dividend payments to common stockholders, to buy back shares and/or partnership units.
Under U.S. Federal income tax principles, a nontaxable return of capital,
sometimes referred to as a "non-dividend distribution," is a cash
distribution that is not paid out of the taxable earnings and profits of a
corporation. For common stockholders, a nontaxable return of capital
reduces the cost basis of an investment. It is not taxed until the cost
basis of said investment is fully recovered.
The remaining portion of the dividends are treated as a qualified dividend for U.S. Federal income tax purposes. This information has been reported to certain firms that provide U.S. recipients of BGC's dividend with their IRS Forms 1099-DIV and non-U.S. recipients with their IRS Forms 1042-S.
The portion of dividends to common stockholders that will be taxable will not impact BGC Partners' financial results for either GAAP or distributable earnings or the Company's or its affiliates' ability to pay distributions to all partnership units and dividend payments to common stockholders.
This information is not intended to be all-inclusive or to render specific professional tax advice.