Two Harbors Investment Corp. (NYSE: TWO), an Agency + MSR
mortgage real estate investment trust, announced today the tax
treatment of the company’s common stock and preferred stock
dividends declared in 2022. This information is provided to assist
stockholders with tax reporting requirements related to dividend
distribution of taxable income by Two Harbors. Stockholders should
review the 2022 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
Two Harbors is required to report the portion of its 2022
dividends that are treated as excess inclusion income for federal
income tax purposes. No portion of the company’s 2022 dividend
distributions are expected to consist of excess inclusion income,
which may be treated as unrelated business taxable income (UBTI)
and subject to special tax reporting for certain tax-exempt
investors.
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.
The company’s common stock distribution, payable to stockholders
on January 28, 2022, with a record date of December 29, 2021, is
treated as a 2022 distribution for tax purposes and is reported on
the 2022 Form 1099-DIV due to the REIT’s insufficient earnings and
profits as of the tax year ending December 31, 2021. In addition,
the company declared dividends with respect to its common stock and
Series A, Series B and Series C preferred shares on December 19,
2022. The record date for the company’s common stock distribution
was January 5, 2023, and the record date for the company’s Series
A, Series B and Series C preferred distributions was January 12,
2023. Accordingly, these common and preferred distributions will be
treated as a 2023 distribution for tax purposes and reported on the
2023 Form 1099-DIV.
Distributions for Two Harbors Investment Corp.
The federal income tax classification of the Two Harbors’ 2022
common and preferred stock distributions as it is expected to be
reported on Form 1099-DIV is set forth in the following tables.
2022 FORM 1099-DIV – Common
Stock
Box 1a Total
Box 1b Total
Box 2a Total
Box 3 Total
Box 5 Total
Distribution Type
Declaration Date
Record Date
Payable Date
2022 Total Distribution Per
Share
Adjustments
2022 Ordinary
Dividends
2022 Qualified
Dividends(2)
2022 Capital Gain
Distributions
2022 Nondividend
Distributions
Section 199A
Dividends(3)
Cash
12/16/2021
12/29/2021
1/28/2022
$0.000000
$0.170000(1)
$0.170000
$0.000000
$0.000000
$0.000000
$0.170000
Cash
3/23/2022
4/4/2022
4/29/2022
$0.170000
$0.000000
$0.170000
$0.000000
$0.000000
$0.000000
$0.170000
Cash
6/22/2022
7/5/2022
7/29/2022
$0.170000
$0.000000
$0.170000
$0.000000
$0.000000
$0.000000
$0.170000
Cash
9/21/2022
10/3/2022
10/28/2022
$0.170000
$0.000000
$0.170000
$0.000000
$0.000000
$0.000000
$0.170000
Totals
$0.510000
$0.170000
$0.680000
$0.000000
$0.000000
$0.000000
$0.680000
(1) - Pursuant to IRC Section 857(b)(9),
cash distributions made on January 28, 2022 with a record date of
December 29, 2021 are treated as received by stockholders on
December 31, 2021 to the extent of 2021 earnings and profits. As
Two Harbors' aggregate 2021 cash distributions exceeded its 2021
earnings and profits, the January 2022 cash distribution declared
in the fourth quarter of 2021 is treated as a 2022 distribution for
federal income tax purposes and was not included on the 2021 Form
1099. If you were a stockholder of record as of December 30, 2021,
$0.0000 was reported on your 2021 Form 1099 and $0.1700 is reported
on your 2022 Form 1099.
(2) - Qualified Dividends shows the
portion of the amount in Box 1a that may be eligible for capital
gains tax rates.
(3) - Section 199A Dividends shows the
portion of the amount in Box 1a that may be eligible for the 20%
qualified business income deduction under Section 199A.
2022 FORM 1099-DIV – Preferred
Series A
Box 1a Total
Box 1b Total
Box 2a Total
Box 3 Total
Box 5 Total
Distribution Type
Declaration Date
Record Date
Payable Date
2022 Total Distribution Per
Share
Adjustments
2022 Ordinary
Dividends
2022 Qualified
Dividends(1)
2022 Capital Gain
Distributions
2022 Nondividend
Distributions
Section 199A
Dividends(2)
Cash
12/16/2021
1/12/2022
1/27/2022
$0.507810
$0.000000
$0.507810
$0.000000
$0.000000
$0.000000
$0.507810
Cash
3/23/2022
4/12/2022
4/27/2022
$0.507810
$0.000000
$0.507810
$0.000000
$0.000000
$0.000000
$0.507810
Cash
6/22/2022
7/12/2022
7/27/2022
$0.507810
$0.000000
$0.507810
$0.000000
$0.000000
$0.000000
$0.507810
Cash
9/21/2022
10/12/2022
10/27/2022
$0.507810
$0.000000
$0.507810
$0.000000
$0.000000
$0.000000
$0.507810
Totals
$2.031240
$0.000000
$2.031240
$0.000000
$0.000000
$0.000000
$2.031240
(1) - Qualified Dividends shows the
portion of the amount in Box 1a that may be eligible for capital
gains tax rates.
(2) - Section 199A Dividends shows the
portion of the amount in Box 1a that may be eligible for the 20%
qualified business income deduction under Section 199A.
2022 FORM 1099-DIV – Preferred
Series B
Box 1a Total
Box 1b Total
Box 2a Total
Box 3 Total
Box 5 Total
Distribution Type
Declaration Date
Record Date
Payable Date
2022 Total Distribution Per
Share
Adjustments
2022 Ordinary
Dividends
2022 Qualified
Dividends(1)
2022 Capital Gain
Distributions
2022 Nondividend
Distributions
Section 199A
Dividends(2)
Cash
12/16/2021
1/12/2022
1/27/2022
$0.476560
$0.000000
$0.476560
$0.000000
$0.000000
$0.000000
$0.476560
Cash
3/23/2022
4/12/2022
4/27/2022
$0.476560
$0.000000
$0.476560
$0.000000
$0.000000
$0.000000
$0.476560
Cash
6/22/2022
7/12/2022
7/27/2022
$0.476560
$0.000000
$0.476560
$0.000000
$0.000000
$0.000000
$0.476560
Cash
9/21/2022
10/12/2022
10/27/2022
$0.476560
$0.000000
$0.476560
$0.000000
$0.000000
$0.000000
$0.476560
Totals
$1.906240
$0.000000
$1.906240
$0.000000
$0.000000
$0.000000
$1.906240
(1) - Qualified Dividends shows the
portion of the amount in Box 1a that may be eligible for capital
gains tax rates.
(2) - Section 199A Dividends shows the
portion of the amount in Box 1a that may be eligible for the 20%
qualified business income deduction under Section 199A.
2022 FORM 1099-DIV – Preferred Series
C
Box 1a Total
Box 1b Total
Box 2a Total
Box 3 Total
Box 5 Total
Distribution Type
Declaration Date
Record Date
Payable Date
2022 Total Distribution Per
Share
Adjustments
2022 Ordinary
Dividends
2022 Qualified
Dividends(1)
2022 Capital Gain
Distributions
2022 Nondividend
Distributions
Section 199A
Dividends(2)
Cash
12/16/2021
1/12/2022
1/27/2022
$0.453130
$0.000000
$0.453130
$0.000000
$0.000000
$0.000000
$0.453130
Cash
3/23/2022
4/12/2022
4/27/2022
$0.453130
$0.000000
$0.453130
$0.000000
$0.000000
$0.000000
$0.453130
Cash
6/22/2022
7/12/2022
7/27/2022
$0.453130
$0.000000
$0.453130
$0.000000
$0.000000
$0.000000
$0.453130
Cash
9/21/2022
10/12/2022
10/27/2022
$0.453130
$0.000000
$0.453130
$0.000000
$0.000000
$0.000000
$0.453130
Totals
$1.812520
$0.000000
$1.812520
$0.000000
$0.000000
$0.000000
$1.812520
(1) - Qualified Dividends shows the
portion of the amount in Box 1a that may be eligible for capital
gains tax rates.
(2) - Section 199A Dividends shows the
portion of the amount in Box 1a that may be eligible for the 20%
qualified business income deduction under Section 199A.
Tax Treatment of the Reverse Stock Split
On November 1, 2022, the company completed a one-for-four
reverse stock split of the outstanding shares of Two Harbors common
stock (“Reverse Stock Split”). Pursuant to the Reverse Stock Split,
every four (4) 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 2022 Two Harbors IRS Form
8937, Report of Organizational Actions Affecting Basis of
Securities, is provided on the Two Harbors website under the “Tax
Information” section within the “Investors” and “Stock Information”
sections.
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 St. Louis Park, MN.
Additional Information
Stockholders of Two Harbors and other interested persons may
find additional information regarding the company at
www.twoharborsinvestment.com, at the Securities and Exchange
Commission’s Internet site at www.sec.gov or by directing requests
to: Two Harbors Investment Corp., 1601 Utica Avenue South, Suite
900, St. Louis Park, MN, 55416, telephone (612) 453-4100.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230126005664/en/
Margaret Karr, Head of Investor Relations, Two Harbors
Investment Corp., (612) 453-4080,
Margaret.Karr@twoharborsinvestment.com.
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