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© SEI 2022 For Intermediary Use Only. Do Not Distribute. 7 H. How is the ROCR classification amount calculated? Example: Original dividend: payable 6/15/22, 5% on 10,000 shares = $500 Return of capital announcement on 2/01/23 for 25% of original dividend on 6/15/22 ROCR % = 25% Of the 10,000 shares, there were 4 tax lots Tax lot # Shares 1 2,000 2 4,000 5 3,000 7 1,000 Total 10,000 1. This is how to calculate the cost basis adjustment for the entire dividend. Cost basis adjustment = $ amount of original dividend * ROCR % Cost basis adjustment = $500 * 25% Cost basis adjustment = $125 ** $125 is the Federal Tax Cost Adjustment amount that would appear on the client's transactions. ** 2. This is how to calculate the cost basis adjustment for each tax lot when there are multiple tax lots: Step 1 – Calculate the Adjustment rate per share: Adjustment rate = [Reclassification rate * dividend amt/original share amount] Reclassification rate = rate supplied by the tax vendor= 25% Dividend amount = $500 Original share amount (# of shares held at time of divided) = 10,000 Adjustment rate = [25% * 500]/10,000 Adjustment rate = 0.0125 Step 2 – Calculate the cost adjustment per tax lot. Tax lot # Shares Adjustment Rate Cost Adjustment 1 2,000 0.0125 $ (25.00) 2 4,000 0.0125 $ (50.00) 5 3,000 0.0125 $ (37.50) 7 1,000 0.0125 $ (12.50) Total 10,000 $ (125.00) 5. Questions regarding Income Re-allocation (IR): A. What is Income Re-allocation? In early February, 'collective' instruments may perform Income Re-allocation (IR) of income paid in 2022. This is to separate the income's tax character to be specific between taxable income, tax-exempt income, and capital gain distributions. This is a separate process from the 'ROCR' process above. B. What assets perform Income Re-allocation? The most common assets that have Income Re-allocation are Mutual funds. Although certain Real Estate Investment Trusts (REITS), exchange-traded funds (ETFs), and fixed-income assets may reclassify.

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