Ellington Financial Inc. Common Stock (NYSE: EFC)
Ellington Financial Inc. 6.750% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (NYSE: EFC PR A)
Ellington Financial Inc. 6.250% Series B Fixed-Rate Reset Cumulative Redeemable Preferred Stock (NYSE: EFC PR B)
We have elected to be taxed as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), effective January 1, 2019. As such, we are required to distribute annually 90% of our taxable net income. As long as we qualify as a REIT, we will generally not be subject to U.S. federal or state corporate taxes on our taxable net income to the extent that we distribute all of our annual taxable net income to our stockholders.
REIT distributions to stockholders will generally be taxable as ordinary income. However, a portion of such distributions may be designated by us as long-term capital gain to the extent that such portion is attributable to our sale of capital assets held for more than one year. If we pay distributions in excess of our current and accumulated earnings and profits, such distributions will be treated as a tax-free return of capital to the extent of each stockholder's tax basis in our common stock and as capital gain thereafter. Stockholders will be notified of the proper tax characterization of EFC's dividends by way of IRS Form 1099-DIV following the close of each tax year. Due to the complex nature of the applicable tax rules, it is recommended that stockholders consult their tax advisors to ensure proper tax treatment of dividends received.
Prior to January 1, 2019, EFC was taxed as a partnership and was required to provide shareholders with a Schedule K-1, which separately reports the shareholders’ items of income, gain, loss, deduction and credits. As a result of our election to be taxed as a REIT effective January 1, 2019, shareholders received a final Schedule K-1 for the period from January 1, 2018 through December 31, 2018. The final Schedule K-1 should have been reported on shareholders’ 2018 tax return.
To request a copy of your K-1 form for 2018 or prior years, please contact firstname.lastname@example.org
The Company does not provide advice on tax matters to its shareholders or to broker/nominees who hold the Company's shares on behalf of their customers. The information provided above is not intended to, and cannot, be used by any taxpayer to avoid penalties that may be imposed under U.S. federal income tax law.
Non-U.S. holders of the Company's common shares and broker/nominees who hold shares on behalf of such holders are strongly urged to consult with their own tax advisors with regard to the U.S. federal income tax consequences of the dividends paid by the Company, including with regards to U.S. tax withholding.