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King-of-Kings wrote: Not sure what you mean by the "return of Capital went negative"? The portion of the distribution (beyond the eligible dividend) and is labelled as Return of Capital. That amount is always tax-free when received as distribution, However, you must reduce the cost base at which you purchases the shares by this amount. The Cost Base (or more correctly the Adjusted Cost Base ACB) only comes into play when you sell the shares, hence it might result in having to report Capital Gains up on redemption/sale. If you never sell your shares, you never have to take (or realize) any capital gains. There can never be any "negative" return of capital... That would mean the dividend portion is bigger than the annual distribution - something that's impossible. And if it were possible, all it means is that your ACB went UP instead of DOWN... ie you will realize a capital loss when you sell your shares... Remember, the strategy is to collect the dividends that all 10 stocks in the portfolio pay, plus and premiums generated through the sale of covered calls. No party will exercise these calls if the share price is not in the money as it would be cheaper to buy the stock on the open market for less than the strike price. They will only purchase if the price has appreciated and they can buy at the lower strike price specified in the option. That would generate almost no capital gain because we sell Covered Call Options that are AT THE MONEY (as opposed to In-the-money or Out-of- the-Money option)... and since the covered call options are only on 50% of the portfilio, we as investors in the ETF would miss out any potential capital gains on half the portfolio. So there is only Dividend Income, Option Premiums from the sale of Covered Calls, and Capital Gains on any realized gains if any of the 50% of the remaining shares are sold at a gain.... BUT the monthly distributions only report Eligible Dividends AND anything more than that are treated as Return of Capital.
