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In my 1099-DIV there is an amount in box 3 (Nontaxable distributions). It turns out this is a return of capital fron a bond mutual fund that I own. These distributions took place three times during the year.

I know that these are not taxable dividends and that the return of capital (ROC) should be used to reduce the cost bases of the shares. But, since I have bought shares in many lots because of div. reinvestment, do I have to prorate the ROC across all shares? Or do I simply adjust the basis of the oldest shares?

Thanks for any help you can offer. I couldn't find this topic in the Fool Tax Center.
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