Investor Relations:

Tax Information

The tax information included below relates to the common and preferred stock for Two Harbors as well as historical tax information for CYS Investments Inc., a company acquired in 2018. Tax information related to the Convertible Senior Notes can be found here.

Two Harbors Investment Corp. Tax Information

Tax reporting related to 2021 common and preferred stock dividend distributions made by Two Harbors will be available here by January 31, 2022.

This information is provided to assist stockholders with tax reporting requirements related to dividend distributions by Two Harbors. Stockholders should review the 2021 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below. Additionally, as each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

Issuers of corporate securities are required to complete Internal Revenue Service Form 8937 to report organizational actions, including nontaxable distributions that affect the basis of the securities involved in the organizational action. The 2021 Two Harbors IRS Forms 8937, Report of Organization Actions Affecting Basis of Securities, are provided below.

This information is provided to assist stockholders with tax reporting requirements related to dividend distributions by Two Harbors. Stockholders should review the 2020 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below. Additionally, as each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

Tax Treatment of the Common and Preferred Distributions

Two Harbors is required to report the portion of its 2020 dividends that are treated as excess inclusion income for federal income tax purposes. No portion of the company’s 2020 dividend distributions are expected to consist of excess inclusion income, which may be treated as unrelated business taxable income (UBTI) and subject to special tax reporting for certain tax exempt investors.

Pursuant to the Internal Revenue Code of 1986, as amended, dividends declared by a real estate investment trust (REIT) during the last three months of a calendar year that are payable to stockholders of record on a specified date in such three month period, but which are actually paid during January of the following calendar year, are considered paid on December 31st of the calendar year in which the dividends were declared, to the extent of the REIT’s distributable earnings and profits. The company’s fourth quarter common stock distribution, payable to stockholders on January 29, 2021 with a record date of December 30, 2020, is treated as a 2021 distribution for tax purposes and will be reported on the 2021 Form 1099-DIV due to the REIT’s insufficient earnings and profits for the tax year ending December 31, 2020.

Distributions for Two Harbors Investment Corp.

The federal income tax classification of Two Harbors’ 2020 common and preferred stock distributions as it is expected to be reported on Form 1099-DIV is set forth in the following tables.

2020 FORM 1099-DIV – Common Stock Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2020 Total Distribution Per Share Adjustments (1) 2020 Ordinary Dividends 2020 Qualified Dividends (2) 2020 Capital Gain Distributions 2020 Nondividend Distributions Section 199A Dividends (3)
Cash 4/6/2020 4/16/2020 4/29/2020 $0.050000 $0.000000 $0.000000 $0.000000 $0.000000 $0.050000 $0.000000
Cash 6/18/2020 6/30/2020 7/29/2020 $0.140000 $0.000000 $0.000000 $0.000000 $0.000000 $0.140000 $0.000000
Cash 9/21/2020 10/1/2020 10/29/2020 $0.140000 $0.000000 $0.000000 $0.000000 $0.000000 $0.140000 $0.000000
Cash 12/17/2020 12/30/2020 1/29/2021 $0.170000 ($0.170000) $0.000000 $0.000000 $0.000000 $0.000000 $0.000000
Totals $0.500000 ($0.170000) $0.000000 $0.000000 $0.000000 $0.330000 $0.000000

(1) Pursuant to IRC Section 857(b)(9), cash distributions made on January 29, 2021 with a record date of December 30, 2020 are treated as received by stockholders on December 31, 2020 to the extent of 2020 earnings and profits. As Two Harbors' aggregate 2020 cash distributions exceeded its 2020 earnings and profits, the January 2021 cash distribution declared in the fourth quarter of 2020 is treated as a 2021 distribution for federal income tax purposes and is not included on the 2020 Form 1099. If you were a stockholder of record as of December 30, 2020, $0.0000 is reported on your 2020 Form 1099 and $0.1700 will be reported on your 2021 Form 1099.

(2) Qualified Dividends shows the portion of the amount in Box 1a that may be eligible for capital gains tax rates.

(3) Section 199A Dividends shows the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A.

2020 FORM 1099-DIV – Preferred Series A Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2020 Total Distribution Per Share Adjustments 2020 Ordinary Dividends 2020 Qualified Dividends(1) 2020 Capital Gain Distributions 2020 Nondividend Distributions Section 199A Dividends(2)
Cash 12/17/2019 1/10/2020 1/27/2020 $0.507810 $0.000000 $0.507810 $0.000000 $0.000000 $0.000000 $0.507810
Cash 4/6/2020 4/16/2020 4/29/2020 $0.507810 $0.000000 $0.202812 $0.000000 $0.000000 $0.304998 $0.202812
Cash 6/18/2020 7/10/2020 7/27/2020 $0.507810 $0.000000 $0.000000 $0.000000 $0.000000 $0.507810 $0.000000
Cash 9/21/2020 10/12/2020 10/27/2020 $0.507810 $0.000000 $0.000000 $0.000000 $0.000000 $0.507810 $0.000000
Totals $2.031240 $0.000000 $0.710622 $0.000000 $0.000000 $1.320618 $0.710622

(1) Qualified Dividends shows the portion of the amount in Box 1a that may be eligible for capital gains tax rates.

(2) Section 199A Dividends shows the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A.

2020 FORM 1099-DIV – Preferred Series B Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2020 Total Distribution Per Share Adjustments 2020 Ordinary Dividends 2020 Qualified Dividends(1) 2020 Capital Gain Distributions 2020 Nondividend Distributions Section 199A Dividends(2)
Cash 12/17/2019 1/10/2020 1/27/2020 $0.476560 $0.000000 $0.476560 $0.000000 $0.000000 $0.000000 $0.476560
Cash 4/6/2020 4/16/2020 4/29/2020 $0.476560 $0.000000 $0.190331 $0.000000 $0.000000 $0.286229 $0.190331
Cash 6/18/2020 7/10/2020 7/27/2020 $0.476560 $0.000000 $0.000000 $0.000000 $0.000000 $0.476560 $0.000000
Cash 9/21/2020 10/12/2020 10/27/2020 $0.476560 $0.000000 $0.000000 $0.000000 $0.000000 $0.476560 $0.000000
Totals $1.906240 $0.000000 $0.666891 $0.000000 $0.000000 $1.239349 $0.666891

(1) Qualified Dividends shows the portion of the amount in Box 1a that may be eligible for capital gains tax rates.

(2) Section 199A Dividends shows the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A.

2020 FORM 1099-DIV – Preferred Series C Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2020 Total Distribution Per Share Adjustments 2020 Ordinary Dividends 2020 Qualified Dividends(1) 2020 Capital Gain Distributions 2020 Nondividend Distributions Section 199A Dividends(2)
Cash 12/17/2019 1/10/2020 1/27/2020 $0.453130 $0.000000 $0.453130 $0.000000 $0.000000 $0.000000 $0.453130
Cash 4/6/2020 4/16/2020 4/29/2020 $0.453130 $0.000000 $0.180974 $0.000000 $0.000000 $0.272156 $0.180974
Cash 6/18/2020 7/10/2020 7/27/2020 $0.453130 $0.000000 $0.000000 $0.000000 $0.000000 $0.453130 $0.000000
Cash 9/21/2020 10/12/2020 10/27/2020 $0.453130 $0.000000 $0.000000 $0.000000 $0.000000 $0.453130 $0.000000
Totals $1.812520 $0.000000 $0.634104 $0.000000 $0.000000 $1.178416 $0.634104

(1) Qualified Dividends shows the portion of the amount in Box 1a that may be eligible for capital gains tax rates.

(2) Section 199A Dividends shows the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A.

2020 FORM 1099-DIV – Preferred Series D Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2020 Total Distribution Per Share Adjustments 2020 Ordinary Dividends 2020 Qualified Dividends(1) 2020 Capital Gain Distributions 2020 Nondividend Distributions Section 199A Dividends(2)
Cash 12/17/2019 1/1/2020 1/15/2020 $0.484375 $0.000000 $0.484375 $0.000000 $0.000000 $0.000000 $0.484375
Cash 4/6/2020 4/16/2020 4/29/2020 $0.484375 $0.000000 $0.193453 $0.000000 $0.000000 $0.290922 $0.193453
Cash 6/18/2020 7/1/2020 7/15/2020 $0.484375 $0.000000 $0.000000 $0.000000 $0.000000 $0.484375 $0.000000
Cash 9/21/2020 10/1/2020 10/15/2020 $0.484375 $0.000000 $0.000000 $0.000000 $0.000000 $0.484375 $0.000000
Totals $1.937500 $0.000000 $0.677828 $0.000000 $0.000000 $1.259672 $0.677828

(1) Qualified Dividends shows the portion of the amount in Box 1a that may be eligible for capital gains tax rates.

(2) Section 199A Dividends shows the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A.

2020 FORM 1099-DIV – Preferred Series E Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2020 Total Distribution Per Share Adjustments 2020 Ordinary Dividends 2020 Qualified Dividends(1) 2020 Capital Gain Distributions 2020 Nondividend Distributions Section 199A Dividends(2)
Cash 12/17/2019 1/1/2020 1/15/2020 $0.468750 $0.000000 $0.468750 $0.000000 $0.000000 $0.000000 $0.468750
Cash 4/6/2020 4/16/2020 4/29/2020 $0.468750 $0.000000 $0.187212 $0.000000 $0.000000 $0.281538 $0.187212
Cash 6/18/2020 7/1/2020 7/15/2020 $0.468750 $0.000000 $0.000000 $0.000000 $0.000000 $0.468750 $0.000000
Cash 9/21/2020 10/1/2020 10/15/2020 $0.468750 $0.000000 $0.000000 $0.000000 $0.000000 $0.468750 $0.000000
Totals $1.875000 $0.000000 $0.655962 $0.000000 $0.000000 $1.219038 $0.655962

(1) Qualified Dividends shows the portion of the amount in Box 1a that may be eligible for capital gains tax rates.

(2) Section 199A Dividends shows the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A.

Nondividend Distributions Affecting Basis in Two Harbors Stock

The federal income tax classification of the 2020 nondividend distribution is reported on Form 1099-DIV in box 3. The nondividend distribution has the effect of reducing the basis of a stockholder’s shares of Two Harbors stock. If a stockholder has fully recovered his, her, or its basis in their Two Harbors stock, a nondividend distribution may be treated as a capital gain.

Issuers of corporate securities are required to complete Internal Revenue Service Form 8937 to report organizational actions, including nontaxable distributions that affect the basis of the securities involved in the organizational action. The 2020 Two Harbors IRS Forms 8937, Report of Organization Actions Affecting Basis of Securities, are provided below.

• Common Form 8937
• Preferred A Form 8937
• Preferred B Form 8937
Preferred C Form 8937
• Preferred D Form 8937
• Preferred E Form 8937

In addition, Two Harbors declared dividends with respect to its Series A, Series B, Series C, Series D and Series E preferred shares on December 17, 2020. The record date for Series A, Series B, and Series C preferred dividends was January 12, 2021. The record date for Series D and Series E preferred dividends was January 1, 2021. Accordingly, these preferred dividends will be taxable to stockholders in the 2021 tax year.

Consult Your Tax Advisor

Stockholders may have additional reporting obligations to the Internal Revenue Service and/or other tax authorities.

The U.S. federal income tax treatment of holding Two Harbors common and preferred stock to any particular stockholder will depend on the stockholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences to you, in light of your particular investment or tax circumstances, of acquiring, holding and disposing of Two Harbors common and preferred stock.

Two Harbors does not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S., federal, state or local tax penalties. Please consult your advisor as to any tax, accounting or legal statements made herein.

This information is provided to assist stockholders with tax reporting requirements related to dividend distribution of taxable income by Two Harbors Investment Corp. Stockholders should review the 2019 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below. Additionally, as each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

Tax Treatment of the Common and Preferred Distributions

Two Harbors is required to report the portion of their 2019 dividends that are treated as excess inclusion income for federal income tax purposes. No portion of the company’s 2019 dividend distributions are expected to consist of excess inclusion income, which may be treated as unrelated business taxable income (UBTI) and subject to special tax reporting for certain tax exempt investors.

Pursuant to the Internal Revenue Code of 1986, as amended, dividends declared by a real estate investment trust (REIT) during the last three months of a calendar year that are payable to stockholders of record on a specified date in such three month period, but which are actually paid during January of the following calendar year, are considered paid on December 31st of the calendar year in which the dividends were declared, to the extent of the REIT’s distributable earnings and profits.

Distributions for Two Harbors Investment Corp.

The Federal income tax classification of the Two Harbors 2019 common and preferred stock distributions as it is expected to be reported on Form 1099-DIV is set forth in the following tables.

2019 FORM 1099 – Common Stock Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2019 Total Distribution Per Share 2019 Ordinary Dividends 2019 Qualified Dividends(1) 2019 Capital Gain Distributions 2019 Nondividend Distributions Section 199A Dividends(2)
Cash 3/19/2019 3/29/2019 4/29/2019 $0.470000 $0.470000 $0.044402 $0.000000 $0.000000 $0.425598
Cash 6/19/2019 7/1/2019 7/29/2019 $0.400000 $0.400000 $0.037789 $0.000000 $0.000000 $0.362211
Cash 9/19/2019 9/30/2019 10/28/2019 $0.400000 $0.400000 $0.037789 $0.000000 $0.000000 $0.362211
Cash 12/17/2019 12/31/2019 1/24/2020 $0.400000 $0.400000 $0.037789 $0.000000 $0.000000 $0.362211
Totals $1.670000 $1.670000 $0.157769 $0.000000 $0.000000 $1.512231

2019 FORM 1099 – Preferred Series A Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2019 Total Distribution Per Share 2019 Ordinary Dividends 2019 Qualified Dividends(1) 2019 Capital Gain Distributions 2019 Nondividend Distributions Section 199A Dividends(2)
Cash 12/18/2018 1/11/2019 1/28/2019 $0.507810 $0.507810 $0.047974 $0.000000 $0.000000 $0.459836
Cash 3/19/2019 4/12/2019 4/29/2019 $0.507810 $0.507810 $0.047974 $0.000000 $0.000000 $0.459836
Cash 6/19/2019 7/12/2019 7/29/2019 $0.507810 $0.507810 $0.047974 $0.000000 $0.000000 $0.459836
Cash 9/19/2019 10/11/2019 10/28/2019 $0.507810 $0.507810 $0.047974 $0.000000 $0.000000 $0.459836
Totals $2.031240 $2.031240 $0.191896 $0.000000 $0.000000 $1.839344


2019 FORM 1099 – Preferred Series B Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2019 Total Distribution Per Share 2019 Ordinary Dividends 2019 Qualified Dividends(1) 2019 Capital Gain Distributions 2019 Nondividend Distributions Section 199A Dividends(2)
Cash 12/18/2018 1/11/2019 1/28/2019 $0.476560 $0.476560 $0.045022 $0.000000 $0.000000 $0.431538
Cash 3/19/2019 4/12/2019 4/29/2019 $0.476560 $0.476560 $0.045022 $0.000000 $0.000000 $0.431538
Cash 6/19/2019 7/12/2019 7/29/2019 $0.476560 $0.476560 $0.045022 $0.000000 $0.000000 $0.431538
Cash 9/19/2019 10/11/2019 10/28/2019 $0.476560 $0.476560 $0.045022 $0.000000 $0.000000 $0.431538
Totals $1.906240 $1.906240 $0.180088 $0.000000 $0.000000 $1.726152


2019 FORM 1099 – Preferred Series C Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2019 Total Distribution Per Share 2019 Ordinary Dividends 2019 Qualified Dividends(1) 2019 Capital Gain Distributions 2019 Nondividend Distributions Section 199A Dividends(2)
Cash 12/18/2018 1/11/2019 1/28/2019 $0.453130 $0.453130 $0.042808 $0.000000 $0.000000 $0.410322
Cash 3/19/2019 4/12/2019 4/29/2019 $0.453130 $0.453130 $0.042808 $0.000000 $0.000000 $0.410322
Cash 6/19/2019 7/12/2019 7/29/2019 $0.453130 $0.453130 $0.042808 $0.000000 $0.000000 $0.410322
Cash 9/19/2019 10/11/2019 10/28/2019 $0.453130 $0.453130 $0.042808 $0.000000 $0.000000 $0.410322
Totals $1.812520 $1.812520 $0.171232 $0.000000 $0.000000 $1.641288

2019 FORM 1099 – Preferred Series D Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2019 Total Distribution Per Share 2019 Ordinary Dividends 2019 Qualified Dividends(1) 2019 Capital Gain Distributions 2019 Nondividend Distributions Section 199A Dividends(2)
Cash 12/18/2018 1/1/2019 1/15/2019 $0.484375 $0.484375 $0.045760 $0.000000 $0.000000 $0.438615
Cash 3/19/2019 4/1/2019 4/15/2019 $0.484375 $0.484375 $0.045760 $0.000000 $0.000000 $0.438615
Cash 6/19/2019 7/1/2019 7/15/2019 $0.484375 $0.484375 $0.045760 $0.000000 $0.000000 $0.438615
Cash 9/19/2019 10/1/2019 10/15/2019 $0.484375 $0.484375 $0.045760 $0.000000 $0.000000 $0.438615
Totals $1.937500 $1.937500 $0.183040 $0.000000 $0.000000 $1.754460


2019 FORM 1099 – Preferred Series E Box 1a Total Box 1b Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2019 Total Distribution Per Share 2019 Ordinary Dividends 2019 Qualified Dividends(1) 2019 Capital Gain Distributions 2019 Nondividend Distributions Section 199A Dividends(2)
Cash 12/18/2018 1/1/2019 1/15/2019 $0.468750 $0.468750 $0.044284 $0.000000 $0.000000 $0.424466
Cash 3/19/2019 4/1/2019 4/15/2019 $0.468750 $0.468750 $0.044284 $0.000000 $0.000000 $0.424466
Cash 6/19/2019 7/1/2019 7/15/2019 $0.468750 $0.468750 $0.044284 $0.000000 $0.000000 $0.424466
Cash 9/19/2019 10/1/2019 10/15/2019 $0.468750 $0.468750 $0.044284 $0.000000 $0.000000 $0.424466
Totals $1.875000 $1.875000 $0.177136 $0.000000 $0.000000 $1.697864

(1) - Qualified Dividends shows the portion of the amount in Box 1a that may be eligible for capital gains tax rates

(2) - Section 199A Dividends shows the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A

In addition, Two Harbors declared dividends with respect to its Series A, Series B, Series C, Series D, and Series E preferred shares on December 17, 2019. The record date for Series A, Series B, and Series C preferred dividends was January 10, 2020. The record date for Series D and Series E preferred dividends was January 1, 2020. Accordingly, these preferred dividends will be taxable to stockholders in the 2020 year.

Consult Your Tax Advisor

Stockholders may have additional reporting obligations to the Internal Revenue Service and/or other tax authorities.

The U.S. federal income tax treatment of holding Two Harbors common and preferred stock to any particular stockholder will depend on the stockholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences to you, in light of your particular investment or tax circumstances, of acquiring, holding and disposing of Two Harbors common and preferred stock.

Two Harbors does not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S., federal, state or local tax penalties. Please consult your advisor as to any tax, accounting or legal statements made herein.

This information is provided to assist stockholders with tax reporting requirements related to dividend distribution of taxable income by Two Harbors and CYS. Stockholders should review the 2018 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below. Additionally, as each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

Tax Treatment of the Common and Preferred Distributions

Two Harbors and CYS are required to report the portion of their 2018 dividends that are treated as excess inclusion income for federal income tax purposes. No portion of either company’s 2018 dividend distributions are expected to consist of excess inclusion income, which may be treated as unrelated business taxable income (UBTI) and subject to special tax reporting for certain tax exempt investors.

Pursuant to the Internal Revenue Code of 1986, as amended, dividends declared by a real estate investment trust (REIT) during the last three months of a calendar year that are payable to stockholders of record on a specified date in such three month period, but which are actually paid during January of the following calendar year, are considered paid on December 31st of the calendar year in which the dividends were declared, to the extent of the REIT’s distributable earnings and profits.

Distributions for Two Harbors Investment Corp.

The Federal income tax classification of the Two Harbors 2018 common and preferred stock distributions as it is expected to be reported on Form 1099-DIV is set forth in the following tables.

2018 FORM 1099 – Common Stock Box 1a Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2018 Total Distribution Per Share 2018 Ordinary Dividends 2018 Capital Gain Distributions 2018 Nondividend Distributions Section 199A Dividends
Cash 03/20/2018 04/02/2018 04/27/2018 $0.470000 $0.470000 $0.000000 $0.000000 $0.470000
Cash 06/19/2018 06/29/2018 07/27/2018 $0.470000 $0.470000 $0.000000 $0.000000 $0.470000
Cash 07/13/2018 07/25/2018 07/30/2018 $0.158370 $0.158370 $0.000000 $0.000000 $0.158370
Cash 09/20/2018 10/01/2018 10/29/2018 $0.311630 $0.311630 $0.000000 $0.000000 $0.311630
Cash 12/18/2018 12/31/2018 01/28/2019 $0.470000 $0.470000 $0.000000 $0.000000 $0.470000
Totals $1.880000 $1.880000 $0.000000 $0.000000 $1.880000


2018 FORM 1099 – Preferred Series A Box 1a Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2018 Total Distribution Per Share 2018 Ordinary Dividends 2018 Capital Gain Distributions 2018 Nondividend Distributions Section 199A Dividends
Cash 12/14/2017 01/12/2018 01/29/2018 $0.507810 $0.507810 $0.000000 $0.000000 $0.507810
Cash 03/20/2018 04/12/2018 04/27/2018 $0.507810 $0.507810 $0.000000 $0.000000 $0.507810
Cash 06/19/2018 07/12/2018 07/27/2018 $0.507810 $0.507810 $0.000000 $0.000000 $0.507810
Cash 09/20/2018 10/12/2018 10/29/2018 $0.507810 $0.507810 $0.000000 $0.000000 $0.507810
Totals $2.031240 $2.031240 $0.000000 $0.000000 $2.031240


2018 FORM 1099 – Preferred Series B Box 1a Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2018 Total Distribution Per Share 2018 Ordinary Dividends 2018 Capital Gain Distributions 2018 Nondividend Distributions Section 199A Dividends
Cash 12/14/2017 01/12/2018 01/29/2018 $0.476560 $0.476560 $0.000000 $0.000000 $0.476560
Cash 04/12/2018 04/27/2018 07/27/2018 $0.476560 $0.476560 $0.000000 $0.000000 $0.476560
Cash 06/19/2018 07/12/2018 07/27/2018 $0.476560 $0.476560 $0.000000 $0.000000 $0.476560
Cash 09/20/2018 10/12/2018 10/29/2018 $0.476560 $0.476560 $0.000000 $0.000000 $0.476560
Totals $1.906240 $1.906240 $0.000000 $0.000000 $1.906240


2018 FORM 1099 – Preferred Series C Box 1a Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2018 Total Distribution Per Share 2018 Ordinary Dividends 2018 Capital Gain Distributions 2018 Nondividend Distributions Section 199A Dividends
Cash 12/14/2017 01/12/2018 01/29/2018 $0.302080 $0.302080 $0.000000 $0.000000 $0.302080
Cash 03/20/2018 04/12/2018 04/27/2018 $0.453130 $0.453130 $0.000000 $0.000000 $0.453130
Cash 06/19/2018 07/12/2018 07/27/2018 $0.453130 $0.453130 $0.000000 $0.000000 $0.453130
Cash 09/20/2018 10/12/2018 10/29/2018 $0.453130 $0.453130 $0.000000 $0.000000 $0.453130
Totals $1.661470 $1.661470 $0.000000 $0.000000 $1.661470


2018 FORM 1099 – Preferred Series D Box 1a Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2018 Total Distribution Per Share 2018 Ordinary Dividends 2018 Capital Gain Distributions 2018 Nondividend Distributions Section 199A Dividends
Cash 09/20/2018 10/01/2018 10/15/2018 $0.484375 $0.484375 $0.000000 $0.000000 $0.484375
Totals $0.484375 $0.484375 $0.000000 $0.000000 $0.484375


2018 FORM 1099 – Preferred Series E Box 1a Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2018 Total Distribution Per Share 2018 Ordinary Dividends 2018 Capital Gain Distributions 2018 Nondividend Distributions Section 199A Dividends
Cash 09/20/2018 10/01/2018 10/15/2018 $0.468750 $0.468750 $0.000000 $0.000000 $0.468750
Totals $0.468750 $0.468750 $0.000000 $0.000000 $0.468750

In addition, Two Harbors declared dividends with respect to its Series A, Series B, Series C, Series D and Series E preferred shares on December 18, 2018. The record date for Series A, Series B and Series C preferred dividends was January 11, 2019. The record date for Series D and Series E preferred dividends was January 1, 2019. Accordingly, these preferred dividends will be taxable to stockholders in the 2019 year.

Distributions for CYS Investments, Inc.

The Federal income tax classification of the CYS 2018 common and preferred stock distributions as it is expected to be reported on Form 1099-DIV is set forth in the following tables.

2018 FORM 1099 – Common Stock Box 1a Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2018 Total Distribution Per Share 2018 Ordinary Dividends 2018 Capital Gain Distributions 2018 Nondividend Distributions Section 199A Dividends
Cash 03/08/2018 06/08/2018 07/13/2018 $0.220000 $0.220000 $0.000000 $0.000000 $0.220000
Cash 06/08/2018 06/22/2018 07/11/2018 $0.220000 $0.220000 $0.000000 $0.000000 $0.220000
Cash 07/13/2018 07/25/2018 07/30/2018 $0.090870 $0.090870 $0.000000 $0.000000 $0.090870
Totals $0.530870 $0.530870 $0.000000 $0.000000 $0.530870


2018 FORM 1099 – Preferred Series A Box 1a Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2018 Total Distribution Per Share 2018 Ordinary Dividends 2018 Capital Gain Distributions 2018 Nondividend Distributions Section 199A Dividends
Cash 12/08/2017 01/01/2018 01/15/2018 $0.484375 $0.484375 $0.000000 $0.000000 $0.484375
Cash 03/08/2018 04/01/2018 04/16/2018 $0.484375 $0.484375 $0.000000 $0.000000 $0.484375
Cash 06/08/2018 07/01/2018 07/16/2018 $0.484375 $0.484375 $0.000000 $0.000000 $0.484375
Totals $1.453125 $1.453125 $0.000000 $0.000000 $1.453125


2018 FORM 1099 – Preferred Series B Box 1a Total Box 2a Total Box 3 Total Box 5 Total
Distribution Type Declaration Date Record Date Payable Date 2018 Total Distribution Per Share 2018 Ordinary Dividends 2018 Capital Gain Distributions 2018 Nondividend Distributions Section 199A Dividends
Cash 12/08/2017 01/01/2018 01/15/2018 $0.468750 $0.468750 $0.000000 $0.000000 $0.468750
Cash 03/08/2018 04/01/2018 04/16/2018 $0.468750 $0.468750 $0.000000 $0.000000 $0.468750
Cash 06/08/2018 07/01/2018 07/16/2018 $0.468750 $0.468750 $0.000000 $0.000000 $0.468750
Totals $1.406250 $1.406250 $0.000000 $0.000000 $1.406250

Merger of Two Harbors Investment Corp. and CYS Investments, Inc.

On July 31, 2018, Two Harbors and CYS announced the closing of the previously announced merger between Two Harbors and CYS. Trading in shares of CYS common stock ceased after market close on July 31, 2018 and shares of CYS common stock were converted into the right to receive 0.4680 newly issued Two Harbors common stock as well as cash consideration of $0.0965 per share prior to market open on August 1, 2018. Upon closing of the merger, each share of CYS 7.75% Series A Cumulative Redeemable Preferred Stock was converted into the right to receive one share of newly classified Two Harbors 7.75% Series D Cumulative Redeemable Preferred Stock, and each share of CYS 7.50% Series B Cumulative Redeemable Preferred Stock was converted into the right to receive one share of newly classified Two Harbors 7.50% Series E Cumulative Redeemable Preferred Stock. The newly issued shares of Two Harbors common stock, Series D and Series E preferred stock began trading on the NYSE on August 1, 2018.

Issuers of corporate securities are required to complete Internal Revenue Service Form 8937 to report organizational actions, including a merger that affects the basis of the securities involved in the organizational action. Stockholders are encouraged to review Form 8937 for the federal income tax treatment of the merger. The 2018 IRS Form 8937, Report of Organization Actions Affecting Basis of Securities, is provided under the “Investors” and “Dividend History” section of the Two Harbors website.

Consult Your Tax Advisor

The U.S. federal income tax treatment of holding Two Harbors and CYS common and preferred stock to any particular stockholder will depend on the stockholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences to you, in light of your particular investment or tax circumstances, of acquiring, holding and disposing of Two Harbors and CYS common and preferred stock.

Two Harbors and CYS do not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S., federal, state or local tax penalties. Please consult your advisor as to any tax, accounting or legal statements made herein.

This information is provided to assist stockholders with tax reporting requirements related to dividend distribution of taxable income by Two Harbors Investment Corp. Stockholders should review the 2017 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below. Additionally, as each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

Tax Treatment of the Common and Preferred Distributions

The Federal income tax classification of the company’s 2017 common and preferred stock distributions as it is expected to be reported on Form 1099-DIV is set forth in the following tables. No portion of the company’s 2017 dividend distributions is expected to consist of unrelated business taxable income (UBTI), which is subject to special tax reporting for certain tax exempt investors.

2017 FORM 1099 – Common Stock Box 1a Total Box 2a Total Box 3 Total
Distribution Type Declaration Date Record Date Payable Date 2017 Total Distribution Per Share 2017 Ordinary Dividends 2017 Capital Gain Distributions 2017 Nondividend Distributions
Cash 03/14/2017 03/31/2017 04/27/2017 $0.250000 $0.090687 $0.000000 $0.159313
Cash 06/15/2017 06/30/2017 07/27/2017 $0.260000 $0.094315 $0.000000 $0.165685
Cash 09/14/2017 09/29/2017 10/27/2017 $0.260000 $0.094315 $0.000000 $0.165685
Granite Point Common Stock 09/14/2017 10/20/2017 11/01/2017 $1.779688 $0.645581 $0.000000 $1.134107
Cash 12/14/2017 12/26/2017 12/29/2017 $0.470000 $0.170492 $0.000000 $0.299508
Totals $3.019688 $1.095390 $0.000000 $1.924298

2017 FORM 1099 – Preferred Series A Box 1a Total Box 2a Total Box 3 Total
Distribution Type Declaration Date Record Date Payable Date 2017 Total Distribution Per Share 2017 Ordinary Dividends 2017 Capital Gain Distributions 2017 Nondividend Distributions
Cash 06/15/2017 07/12/2017 07/27/2017 $0.750430 $0.750430 $0.000000 $0.000000
Cash 09/14/2017 10/12/2017 10/27/2017 $0.507810 $0.507810 $0.000000 $0.000000
Totals $1.258240 $1.258240 $0.000000 $0.000000


2017 FORM 1099 – Preferred Series B Box 1a Total Box 2a Total Box 3 Total
Distribution Type Declaration Date Record Date Payable Date 2017 Total Distribution Per Share 2017 Ordinary Dividends 2017 Capital Gain Distributions 2017 Nondividend Distributions
Cash 09/14/2017 10/12/2017 10/27/2017 $0.518920 $0.518920 $0.000000 $0.000000
Totals $0.518920 $0.518920 $0.000000 $0.000000


The company declared dividends with respect to its Series A, Series B and Series C preferred shares on December 14, 2017. The record date for stockholders entitled to receive each of these preferred dividends was January 12, 2018. Accordingly, these preferred dividends will be taxable to stockholders in the 2018 tax year.

Pursuant to the Internal Revenue Code of 1986, as amended, dividends declared by a real estate investment trust (REIT) during the last three months of a calendar year that are payable to stockholders of record on a specified date in such three month period, but which are actually paid during January of the following calendar year, are considered paid on December 31st of the calendar year in which the dividends were declared, to the extent of the REIT’s distributable earnings and profits.

Tax Treatment of the Granite Point Stock Distribution

On November 1, 2017, the company distributed the 33,071,000 shares of Granite Point Mortgage Trust Inc. (NYSE: GPMT) (“Granite Point”) common stock it had acquired in connection with the contribution of its commercial real estate portfolio to Granite Point. Two Harbors common stockholders who were entitled to take part in this distribution received 0.094765 shares of Granite Point common stock for each share of the company’s common stock outstanding on October 20, 2017, subject to the liquidation of fractional shares for which stockholders received a payment of cash in lieu of such fractional shares.

The company reports the distribution of Granite Point common stock as a taxable distribution for U.S. federal income tax purposes. Common stockholders will be treated as receiving a distribution equal to the fair market value of the Granite Point common stock (and cash in lieu of fractional shares of such common stock) received in the distribution and will take an adjusted tax basis, for federal income tax purposes, in such shares equal to the “fair market value” of such shares based on the market price on the distribution date. For federal income tax purposes, the fair market value of the Granite Point common stock is the closing price on November 1, 2017, which was $18.78 per share.

Tax Treatment of the Reverse Stock Split

On November 1, 2017, immediately following the Granite Point common stock distribution, the company completed a one-for-two reverse stock split of the outstanding shares of Two Harbors common stock (“Reverse Stock Split”). Pursuant to the Reverse Stock Split, every two (2) shares of issued and outstanding common stock were converted into one (1) share of common stock. As a result, stockholders must allocate the aggregate tax basis in their shares held immediately prior to the Reverse Stock Split among the shares held immediately after the Reverse Stock Split (including any fractional shares for which cash was received). In addition, any stockholder who was entitled to receive a fractional share as a result of the Reverse Stock Split instead received cash in lieu thereof and was deemed for federal income tax purposes to have received and then immediately sold such fractional share for cash.

Issuers of corporate securities are required to complete Internal Revenue Service Form 8937 to report organizational actions, including reverse stock splits, that affect the basis of the securities involved in the organizational action. Stockholders are encouraged to review Form 8937 for the federal income tax treatment of the reverse stock split. The 2017 Two Harbors IRS Form 8937, Report of Organization Actions Affecting Basis of Securities, is provided below.

Click here to view the 2017 IRS Form 8937

Nondividend Distributions Affecting Basis in Two Harbors Common Stock

The federal income tax classification of the 2017 nondividend distribution is reported on Form 1099-DIV in box 3. The nondividend distribution has the effect of reducing the basis of a stockholder’s shares of Two Harbors common stock. If a stockholder has fully recovered his, her, or its basis in their Two Harbors common stock, a nondividend distribution may be treated as a capital gain.

Issuers of corporate securities are required to complete Internal Revenue Service Form 8937 to report organizational actions, including nontaxable distributions that affect the basis of the securities involved in the organizational action. The 2017 Two Harbors IRS Form 8937, Report of Organization Actions Affecting Basis of Securities, is provided below.

Click here to view the 2017 IRS Form 8937

Consult Your Tax Advisor

Stockholders may have additional reporting obligations to the Internal Revenue Service and/or other tax authorities.

The U.S. federal income tax treatment of holding Two Harbors common and preferred stock to any particular stockholder will depend on the stockholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences to you, in light of your particular investment or tax circumstances, of acquiring, holding and disposing of Two Harbors common and preferred stock.

Two Harbors does not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S., federal, state or local tax penalties. Please consult your advisor as to any tax, accounting or legal statements made herein.

This information is provided to assist stockholders with tax reporting requirements related to dividend distribution of taxable income by Two Harbors Investment Corp. Stockholders should review the 2016 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below. Additionally, as each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

Tax Treatment of the Distributions

The Federal income tax classification of the 2016 distribution as it is expected to be reported on Form 1099-DIV is set forth in the following table. No portion of the company’s 2016 dividend distributions is expected to consist of unrelated business taxable income (UBTI), which is subject to special tax reporting for certain tax exempt investors.

2016 FORM 1099-DIV Box 1a Total Box 2a Total
Declaration Date Record Date Payable Date 2016 Total Distribution Per Share 2016 Ordinary Dividends 2016 Capital Gain Distributions
03/15/2016 03/31/2016 04/21/2016 $0.230000 $0.230000 $0.000000
06/16/2016 06/30/2016 07/20/2016 $0.230000 $0.230000 $0.000000
09/15/2016 09/30/2016 10/20/2016 $0.230000 $0.230000 $0.000000
12/15/2016 12/30/2016 01/27/2017 $0.240000 $0.240000 $0.000000
Totals $0.9300000 $0.930000 $0.000000

Consult Your Tax Advisor

Stockholders may have additional reporting obligations to the Internal Revenue Service and/or other tax authorities.

The U.S. federal income tax treatment of holding Two Harbors common stock to any particular stockholder will depend on the stockholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences to you, in light of your particular investment or tax circumstances, of acquiring, holding and disposing of Two Harbors common stock.

Two Harbors does not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S., federal, state or local tax penalties. Please consult your advisor as to any tax, accounting or legal statements made herein.

This information is provided to assist stockholders with tax reporting requirements related to dividend distribution of taxable income by Two Harbors Investment Corp. Stockholders should review the 2015 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below. Additionally, as each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

Tax Treatment of the Distributions

The Federal income tax classification of the 2015 distribution as it is expected to be reported on Form 1099-DIV is set forth in the following table. No portion of the company’s 2015 dividend distributions is expected to consist of unrelated business taxable income (UBTI), which is subject to special tax reporting for certain tax exempt investors.

FORM 1099 Box 1a Total Box 2a Total
Declaration Date Record Date Payable Date Total Distribution Per Share Ordinary Dividends Capital Gain Distributions
03/18/2015 03/31/2015 04/21/2015 $0.26000 $0.0994975 $0.1605025
06/17/2015 06/30/2015 07/21/2015 $0.26000 $0.0994975 $0.1605025
09/16/2015 09/30/2015 10/22/2015 $0.26000 $0.0994975 $0.1605025
12/16/2015 12/30/2015 01/20/2016 $0.26000 $0.0994975 $0.1605025
Totals $1.04000 $0.3979900 $0.6420100

Consult Your Tax Advisor

Stockholders may have additional reporting obligations to the Internal Revenue Service and/or other tax authorities.

The U.S. federal income tax treatment of holding Two Harbors common stock to any particular stockholder will depend on the stockholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences to you, in light of your particular investment or tax circumstances, of acquiring, holding and disposing of Two Harbors common stock.

Two Harbors does not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S., federal, state or local tax penalties. Please consult your advisor as to any tax, accounting or legal statements made herein.

This information is provided to assist stockholders with tax reporting requirements related to dividend distribution of taxable income by Two Harbors Investment Corp. Stockholders should review the 2014 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below. Additionally, as each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

Tax Treatment of the Distributions

The Federal income tax classification of the 2014 distribution as it is expected to be reported on Form 1099-DIV is set forth in the following table. No portion of the company’s 2014 dividend distributions is expected to consist of unrelated business taxable income (UBTI), which is subject to special tax reporting for certain tax exempt investors.

FORM 1099 Box 1a Total Box 2a Total
Declaration Date Record Date Payable Date Total Distribution Per Share Ordinary Dividends Capital Gain Distributions
03/17/2014 03/31/2014 04/21/2014 $0.26000 $0.239282 $0.020718
06/17/2014 07/02/2014 07/22/2014 $0.26000 $0.239282 $0.020718
09/16/2014 09/30/2014 10/21/2014 $0.26000 $0.239282 $0.020718
12/16/2014 12/30/2014 01/20/2015 $0.26000 $0.239282 $0.020718
Totals $1.04000 $0.957130 $0.082870

Consult Your Tax Advisor

Stockholders may have additional reporting obligations to the Internal Revenue Service and/or other tax authorities.

The U.S. federal income tax treatment of holding Two Harbors common stock to any particular stockholder will depend on the stockholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences to you, in light of your particular investment or tax circumstances, of acquiring, holding and disposing of Two Harbors common stock.

Two Harbors does not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S., federal, state or local tax penalties. Please consult your advisor as to any tax, accounting or legal statements made herein.

This information is provided to assist stockholders with tax reporting requirements related to dividend distribution of taxable income by Two Harbors Investment Corp. Stockholders should review the 2013 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below.

Stockholders who held a share of Two Harbors common stock for the entire 2013 calendar year will report a nondividend distribution of $0.951268 per share, which is roughly equivalent to the value of the Silver Bay common stock distribution of $0.94720 per share. The entire $0.951268 per share nondividend distribution should be treated as a return of capital for those stockholders who held a share of Two Harbors common stock for the entire 2013 calendar year and who have a tax basis in such share of $0.951268 or greater.

As each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

Tax Treatment of the Distributions

The Federal income tax classification of the 2013 distributions, as expected to be reported on Form 1099-DIV, is set forth in the following table. No portion of the company’s 2013 dividend distributions is expected to consist of unrelated business taxable income (UBTI), which is subject to special tax reporting for certain tax exempt investors.

FORM 1099 Box 1a Total Box 1b Total Box 3 Total
Declaration Date Record Date Payable Date Total Distribution Per Share Ordinary Dividends Qualified Dividends Nondividend Distributions
3/18/2013 4/2/2013 4/24/2013 $0.32000 $0.176222 $0.020701 $0.143778
3/18/2013 4/2/2013 4/24/2013 $0.94720** $0.521617 $0.061276 $0.425581
6/13/2013 6/28/2013 7/23/2013 $0.31000 $0.170715 $0.020055 $0.139285
9/11/2013 9/26/2013 10/23/2013 $0.28000 $0.154195 $0.018114 $0.125805
12/17/2013 12/27/2013 12/31/2013 $0.26000 $0.143181 $0.016820 $0.116819
Totals $2.11720 $1.165930 $0.136966 $0.951268

** Reflects the Silver Bay common stock distribution

Silver Bay Stock Distribution

On March 18, 2013, the company’s board of directors declared a special dividend pursuant to which the company distributed, on a pro rata basis, 17,824,647 shares of common stock it owned of Silver Bay Realty Trust Corp. (NYSE: SBY) to the Two Harbors stockholders of record at the close of business on April 2, 2013.

Two Harbors stockholders received approximately 0.049 shares of Silver Bay common stock for each share of Two Harbors common stock they owned of record on April 2, 2013, subject to the liquidation of fractional shares for which stockholders received cash in lieu of such fractional shares (the “Stock Dividend”). The Stock Dividend was payable on or about April 24, 2013.

On April 29, 2013, Two Harbors stated its intent to report the Stock Dividend as a dividend distribution for U.S. federal income tax purposes. As a result, stockholders will be treated as receiving a dividend distribution equal to the fair market value of the Silver Bay common stock (and cash in lieu of fractional shares of such common stock) received in the distribution and will take an adjusted basis, for federal income tax purposes, in such shares equal to the “fair market value” of such shares based on the market price on the date of the distribution (April 24, 2013). For federal income tax purposes, the fair market value of the Silver Bay common stock is the closing price on April 24, 2013, which was $19.40 per share.

The company further stated its intent to distribute cash in 2013 equal to its current and accumulated earnings and profits through December 31, 2013 (which includes the company’s annual 2013 taxable income), in addition to the Stock Dividend. The company expects that the cumulative quarterly 2013 distributions of cash and Silver Bay common stock that are in excess of the current and accumulated earnings and profit will be treated as a “nondividend distribution” for U.S. federal income tax purposes, which will have the effect of reducing the basis of a stockholder’s shares of Two Harbors common stock. If a stockholder has fully recovered his, her or its basis in their Two Harbors common stock, a nondividend distribution may be treated as a capital gain.

Lastly, the company stated that each quarterly distribution during 2013 would be characterized for tax purposes as having the same percentage allocation that is designated as ordinary, capital gain, and nondividend distribution. The percentage allocation is based on the total cash and the fair market value of property distributed relative to the annual 2013 taxable income. Therefore, the nondividend distribution component will be allocated on a Form 1099 for federal income tax purposes to each dividend paid during 2013.

Return of Capital Affecting Basis in Two Harbors Common Stock

The Federal income tax classification of the 2013 nondividend distribution is reported on Form 1099-DIV in Box 3. The nondividend distribution has the effect of reducing the basis of a stockholder’s shares of Two Harbors common stock, which is referred to as a “return of capital.” If a stockholder has fully recovered his, her or its basis in their Two Harbors common stock, a nondividend distribution may be treated as a capital gain.

Issuers of corporate securities are required to complete Internal Revenue Service Form 8937 to report organizational actions, including nontaxable distributions that affect the basis of the securities involved in the organizational action. Stockholders may view the 2013 IRS Form 8937 below.

Form 8937 2013

Consult Your Tax Advisor

The tax laws require stockholders to retain records with respect to the distribution, including information regarding the amount, basis and fair market value relating to the Silver Bay common stock received by the stockholder in the Stock Dividend. Stockholders may have additional reporting obligations to the Internal Revenue Service and/or other tax authorities.

The U.S. federal income tax treatment of holding Two Harbors common stock to any particular stockholder will depend on the stockholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences to you, in light of your particular investment or tax circumstances, of acquiring, holding and disposing of Two Harbors common stock.

Two Harbors does not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S., federal, state or local tax penalties. Please consult your advisor as to any tax, accounting or legal statements made herein.

Stockholders should review the 2012 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below. Additionally, as each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

During 2012, Two Harbors did not generate qualified dividends income (QDI). Further, no portion of the company’s 2012 dividend distributions is expected to consist of unrelated business taxable income (UBTI), which is subject to special tax reporting for certain tax exempt investors.

Because Two Harbors is a REIT, dividends declared in the last month of a calendar year with a record date in that calendar year, but which are payable in January of the following year, are considered paid for Form 1099 reporting purposes on the record date, not on the payable date, to the extent the REIT has any remaining undistributed earnings and profits (as computed for income tax purposes) as of December 31 of that calendar year.

The Federal income tax classification of the 2012 distribution as it is expected to be reported on Form 1099-DIV is set forth in the following table.

FORM 1099 Box 1a Total Box 2a
Declaration Date Record Date Payable Date Total Distribution Per Share Ordinary Dividends Capital Gains Distribution
3/14/2012 3/26/2012 4/20/2012 $0.40000 $0.326972 $0.073028
6/12/2012 6/22/2012 7/20/2012 $0.40000 $0.326972 $0.073028
9/12/2012 9/24/2012 10/22/2012 $0.36000 $0.294275 $0.065725
12/17/2012 12/31/2012 1/18/2013 $0.55000 $0.449587 $0.100413
Totals $1.71000 $1.397805 $0.312195

Two Harbors Investment Corp. has elected to be treated as a real estate investment trust, or REIT, for U.S. federal income tax purposes and pays out dividends periodically. Because Two Harbors is a REIT, dividends declared in the last month of a calendar year with a record date in that calendar year, but which are payable in January of the following year, are considered paid for Form 1099 reporting purposes on the record date, not on the payable date, to the extent the REIT has any remaining undistributed earnings and profits (as computed for income tax purposes) as of December 31 of that calendar year.

Stockholders should review the 2011 tax statements received from their brokerage firms or other institutions to ensure that the statements agree to the information set forth below.

As each stockholder’s tax situation may be different and each dividend distribution may have its own separate tax status, stockholders should consult with their tax advisor as to the appropriate treatment.

FORM 1099 Box 1a Total Box 1b Box 2a
Declaration Date Record Date Payable Date Total Distribution Per Share Ordinary Dividends Qualified Dividends Capital Gains Distribution
3/2/2011 3/14/2011 4/14/2011 $0.40000 $0.383444 $0.018095 $0.016556
6/14/2011 6/24/2011 7/20/2011 $0.40000 $0.383444 $0.018095 $0.016556
9/14/2011 9/26/2011 10/20/2011 $0.40000 $0.383444 $0.018095 $0.016556
12/14/2011 12/27/2011 1/20/2012 $0.40000 $0.383444 $0.018095 $0.016556
Totals $1.600000 $1.533774 $0.072378 $0.066226

During 2011, Two Harbors generated qualified dividends income (QDI), as defined in the Internal Revenue Code of 1986 as amended, initially generated by its taxable REIT subsidiary. No portion of our 2011 dividend distributions is expected to consist of unrelated business taxable income (UBTI), which is subject to special tax reporting for certain tax exempt investors.

FORM 1099 – Common Stock Box 1a Total
Declaration Date Record Date Payable Date Total Distribution Per Share
3/12/2010 3/31/2010 4/23/2010 $0.36
6/14/2010 6/30/2010 7/22/2010 $0.33
9/13/2010 9/30/2010 10/21/2010 $0.39
12/8/2010 12/17/2010 1/20/2011 $0.40
Totals $1.48

CYS Investments Inc.

On July 31, 2018, Two Harbors Investment Corp. (NYSE: TWO) completed the acquisition of CYS Investments Inc. pursuant to the previously announced Agreement and Plan of Merger between the companies. Upon the closing of the merger, each share of CYS common stock was converted into the right to receive 0.4680 newly issued shares of Two Harbors common stock as well as cash consideration of $0.0965 per share. Based on the number of shares of CYS common stock outstanding as of the closing date, approximately 72.7 million shares of Two Harbors common stock and $15 million in cash consideration were issued to CYS common stockholders in connection with the merger. No fractional shares of Two Harbors common stock were issued in connection with the merger. Instead, CYS common stockholders received cash in lieu of any fractional shares.