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For several years I have owned some shares of a preferred stock issued by Citigroup.

The preferred was issued with restrictions as to what money Citi might use to redeem the shares should it wish to do so in the future.

Recently I received information that Citi would pay shareholders for permission to remove that restriction. Today I got the payment.

It isn't interest or a dividend; they didn't redeem any shares, alhough with the restriction removed I suspect a tender offer for the shares will follow shortly.

I would assume the payment would be taxable, but what would it be called? Can I subtract it from my basis, effectively making it a capital gain? It was something like an option premium...


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