On June 1, 2020 Jerry Driggs Acquires 2,500 Units of the Belle

Essay

On June 1, 2020 Jerry Driggs acquires 2,500 units of the Belle Realty Trust at $12 per unit. During September, 2020, the trust makes a distribution of $1.50 per unit, of which $1.00 represents a return of capital. Mr. Driggs decides to reinvest the entire distribution at a cost of $12.50 per additional unit. What are the tax consequences to Mr. Driggs of the 2020 distribution and its reinvestment? What will be his adjusted cost base per unit after the reinvestment?