A Form 1099-DIV reports your nontaxable distributions in box 3. These are also called nondividend distributions. They're uncommon. Since they represent a return of your cost, they aren't taxable.

Subtract the amount of your nontaxable distribution from your basis. However, if you get back your complete cost, report future distributions as capital gains.

Ex: A nontaxable distribution of $850 on a $10,000 investment reduces the cost to $9,150. If you receive a total of $10,400 nontaxable distributions, $400 -- the amount that exceeds your basis -- is taxable as a capital gain.

To learn more, see IRS Publication 550: Investment Income and Expenses.