Western Asset Mortgage Capital Corporation Announces Tax Characteristics of 2020 Dividends

Rhea-AI Summary

Western Asset Mortgage Capital Corporation (NYSE: WMC) has announced the tax treatment of its common stock dividends for 2020. The dividends declared include a total of $0.42 per share, with specific amounts distributed on two key dates:

• Record Date: 12/28/2020, Payment Date: 01/26/2021, Distribution Rate: $0.06
• Record Date: 10/02/2020, Payment Date: 10/26/2020, Distribution Rate: $0.05

Due to the COVID-19 pandemic's impact, distributions are considered a “Return of Capital.” Shareholders should consult their tax advisors for detailed tax implications related to these dividends.

Positive

• Total dividend declared of $0.42 per share for 2020.
• Clear guidance provided for stockholders regarding tax treatment.

Negative

• Dividends classified as 'Return of Capital' due to adverse COVID-19 impacts.
• Potential taxable losses estimated for the fiscal year ending December 31, 2020.

Western Asset Mortgage Capital Corporation (the “Company”) (NYSE: WMC) announced today the tax treatment of its common stock dividends declared in 2020.

The below information is provided to assist the Company’s stockholders with tax reporting requirements related to dividend distribution of taxable income by the Company. Stockholders should receive IRS Form 1099-DIV containing this information from their brokers, transfer agents or other institutions. These tax statements should be reviewed to ensure that they agree with the information provided below.

Tax Treatment of Distributions

The Federal Income Tax classification of the 2020 dividend distributions on the Company’s common stock, as it is expected to be reported on Form 1099-DIV, is set forth in the following table:

Record Date	Payment Date	Distribution Rate per Share	Total Ordinary Dividends	Qualified Dividends	Total Capital Gains Distributions	Section 199A Dividends(3)	Total Return of Capital(4)
12/28/2020	1/26/2021	$0.06(1)	-	-	-	-	-
10/2/2020	10/26/2020	$0.05	-	-	-	-	$0.05
12/31/2019	1/24/2020	$0.31(2)	$0.155(2)	-	-	$0.155	$0.155
Total		$0.42	$0.155	-	-	$0.155	$0.205

(1)		The cash distributions made on January 26, 2021 with a record date of December 28, 2020 are treated as received by stockholders on January 26, 2021 and taxable in calendar year 2021. The taxable characteristics of these distributions will be determined in January of 2022.
(2)		The cash distributions made on January 24, 2020 with a record date of December 31, 2019 had only 50% treated as received by stockholders on December 31, 2019 and taxable in calendar year 2019 as ordinary income with the remaining 50% taxable in calendar year 2020 and treated as “Return of Capital”.
(3)		Section 199A dividends are a subset of, and included in, the ordinary dividends amount.
(4)		The cash distributions made in the calendar year 2020 are considered “Return of Capital” due the adverse impact of the COVID-19 pandemic on the Company’s operations. The Company estimated taxable losses for the fiscal year ending December 31, 2020.

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 The Company’s common 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 the Company’s common stock.

The Company 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.

ABOUT WESTERN ASSET MORTGAGE CAPITAL CORPORATION

Western Asset Mortgage Capital Corporation is a real estate investment trust that invests in, acquires and manages a diverse portfolio of assets consisting of Residential Whole Loans, Commercial Loans, Non-Agency CMBS, Non-Agency RMBS, GSE Risk Transfer Securities and to a lesser extent Agency RMBS, Agency CMBS and ABS. The Company’s investment strategy may change, subject to the Company’s stated investment guidelines, and is based on its manager Western Asset Management Company, LLC's perspective of which mix of portfolio assets it believes provide the Company with the best risk-reward opportunities at any given time. The Company is externally managed and advised by Western Asset Management Company, LLC, an investment advisor registered with the Securities and Exchange Commission and a wholly-owned subsidiary of Franklin Resources, Inc. Please visit the Company’s website at www.westernassetmcc.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210203005882/en/

FAQ

What is the dividend amount declared by WMC for 2020?

Western Asset Mortgage Capital Corporation declared a total dividend of $0.42 per share for 2020.

When was the dividend payable date for the December 2020 dividend?

The payment date for the December 2020 dividend was January 26, 2021.

What should WMC shareholders consider for tax reporting on dividends?

Shareholders should review IRS Form 1099-DIV from their brokers and consult tax advisors for accurate tax treatment.

What does 'Return of Capital' mean for WMC dividends?

'Return of Capital' indicates that the distributions may not be taxable as income but could reduce the stockholder's basis in the stock.