Yahoo Finance analysis indicates that approximately 96% of SPYI's 12% distribution yield constitutes a return of capital, rather than taxable income, which reduces investors' cost basis. According to IRS regulations, beneficiaries inheriting SPYI shares receive a step-up in cost basis, thereby eliminating years of deferred tax liabilities accumulated from returns of capital. For younger investors in taxable accounts, this arrangement could lead to their cost basis being eroded over decades, ultimately resulting in a substantial deferred tax bill or distributions converting into immediate capital gains.