Company: SWZ
Filing Date: 2025-10-03
Form Type: N-2
Source: 0001999371-25-014685
Chunk: 15

Company: Total Return Securities Fund
Filing Date: 2025-10-03
Form: N-2
Chunk 15
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 distribution” or otherwise, the fair market value of the Rights would be taxable to Record Date Shareholders as a dividend to the extent of the Record Date Shareholder’s pro rata share of the Fund’s current and accumulated earnings and profits, if any, with any excess being treated as a return of capital to the extent thereof and then as capital gain. If the Fund’s position is incorrect, the tax consequences applicable to the holders may also be materially different than as described below.

The following discussion is based upon the treatment of the Rights issuance as a non-taxable distribution with respect to a Record Date Shareholder’s existing Shares for U.S. federal income tax purposes.

Tax Basis in the Rights. If the fair market value of the Rights a Record Date Shareholder receives is less than 15% of the fair market value of the Record Date Shareholder’s existing Shares (with respect to which the Rights are distributed) on the date the Record Date Shareholder receives the Rights, the Rights will be allocated a zero tax basis for U.S. federal income tax purposes, unless the Record Date Shareholder elects to allocate its tax basis in its existing Shares between its existing Shares and the Rights in proportion to the relative fair market values of the existing Shares and the Rights determined on the date of receipt of the Rights. If a Record Date Shareholder chooses to allocate tax basis between its existing Shares and the Rights, the Record Date Shareholder must make this election on a statement included with its timely filed tax return (including extensions) for the taxable year in which the Record Date Shareholder receives the Rights. Such an election is irrevocable. However, if the fair market value of the Rights a Record Date Shareholder receives is 15% or more of the fair market value of their existing Shares on the date the Record Date Shareholder receives the Rights, then the Record Date Shareholder must allocate its tax basis in its existing Shares between those Shares and the Rights the Record Date Shareholder receives in proportion to their fair market values determined on the date the Record Date Shareholder receives the Rights. Please refer to the discussion below regarding the U.S. tax treatment of a Record Date Shareholder that, at the time of the receipt of the Rights, no longer holds the Shares with respect to which the Rights were distributed.

The fair market value of the Rights on the date that the Rights are distributed is uncertain, and we have not obtained, and do not intend to obtain, an appraisal of the fair market value of the Rights on that date. In determining the