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.
For the years ended 2012, 2011 and 2010, the remaining 4 percent, 21
percent and 82 percent of the dividends were 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
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.