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A capital gain dividend is treated by the shareholders that receive it as a gain
from the sale or exchange of a capital asset.
This is discussed in the IRS Bulletin 2004-22 on page 982 if you wish to review it at the website below.
Your gain would be the excess of your distribution over your cost basis. You can report it on Schedule D. The key is to determine whether the REIT was held long-term or short-term. Short term REIT's are held one year or less. Below you will find a downloadable Schedule D where you can enter the distribution, cost basis, and gain in the section for short-term gains or the section for long-term gains.
http://www.irs.gov/pub/irs-irbs/irb04-22.pdf (Page 982)
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