NonDividend Distribution - How to apply on 1040

Doesn't Non Dividend Distribution amount reduce the Cost Basis? 

Where on 1040 should I apply that amount? 

If on 8949, then should it be shown as an adjustment in Col. F & G ?

IF yes, then what is the Code to use in column E? 

Or should the Form 8949 Col. E (Cost) already be showing the reduced basis without using F & G?

Answer :

#1; Correct as return of capital. On Form 1099-DIV, a nondividend distribution will be shown in box 3. If you do not receive such a statement, you report the distribution as an ordinary dividend.

#2: When you receive this type of distribution, you're considered to be getting back some of the money you invested in the company. That's why these payments are sometimes called return of capital distributions. Don't confuse these payments with exempt interest distributions. Those distributions represent interest received by the mutual fund from municipal bonds and similar investments. Return of capital distributions don't come from exempt interest or from any other type of earnings.Return of capital distributions appear in box 3 of Form 1099-DIV, labeled "Nondividend distributions.Before you can determine how to report your distribution, you have to take care of an important piece of business: adjusting the basis of your shares. Your basis is used to measure how much gain or loss you have when you sell your shares. You can think of it as a measure of how much you have invested in your shares. Read more..