YBTC distributions: the notice, the audited number, basis

How YBTC generates the payment

YBTC is an actively managed ETF. It uses a synthetic covered call strategy to pay income weekly, with exposure to the price of one or more ETFs that hold bitcoin [1]. Its summary prospectus is dated May 1, 2026. It says the fund will invest at least 80% of its net assets in options on a bitcoin ETF or an index of bitcoin ETFs, and that it does not invest directly in bitcoin [1].

The synthetic exposure comes from buying call options and selling put options at generally the same strike [1]. Together those track the bitcoin ETF up and down. The income is the premium on sold calls struck out of the money [1]. Those calls will generally expire in approximately one week or less and will be held to or close to expiration [1].

The sold calls limit the fund’s share of gains beyond the strike [1]. The fund intends to make weekly distribution payments, and it may also hold some shares of a bitcoin ETF directly [1]. Short-term Treasury securities and money market funds sit behind the options [1].

The fee table lists management fees of 0.95% under a unitary fee and total annual fund operating expenses of 0.95% [1]. The fact sheet prints an expense ratio of 0.96%, the issuer’s gross figure including acquired fund fees [4]. That is the figure the receipt under the answer carries. The two measure different things, and conflict ledger row 3 carries both with their labels.

The 19a-1 notice and why it is not final

The latest declared payment is $0.101896 per share, payable September 3, 2026. The Rule 19a-1 notice for it estimates 100% of the payment as return of capital [2]. The issuer’s daily NAV file shows a net asset value of 17.89 per share and a market price of 17.88 on September 1, 2026 [3].

The fund page carries labels for a 30-day SEC yield and a distribution rate. Their values render in a browser script that no capture holds [11]. So this page prints not verified for both, rather than a number read from somewhere else.

The notice is a book-basis estimate. Under section 316, a dividend is a distribution out of earnings and profits of the taxable year [7]. Those earnings are computed as of the close of the year, without regard to the earnings at the time the distribution was made [7]. Return of capital is the residual, and the 1099-DIV instructions say to enter it in box 3 if determinable [9].

The prospectus says the same thing from the fund’s side. Distributions in excess of the fund’s earnings and profits are treated as a return of capital [1]. That reduces the shareholder’s cost basis, and once basis is zero, further distributions are capital gain [1]. The prospectus adds that the fund may not suit investors who do not want their principal to decrease over time [1].

The estimate and the audited number

The 2024 receipt is the clearest one in this set. The Rule 19a-1 notice for the $2.062168 per share distribution payable July 31, 2024 estimated 100% of it as return of capital [5]. The audited statement for the fiscal year ended December 31, 2024 reports $15,307,183 of ordinary income and a dash for return of capital [6]. Every dollar the notices called return of capital was ordinary income once the year closed.

The 2025 statement went the other way. For the fiscal year ended December 31, 2025, the tax character was $28,652,228 of ordinary income and $82,216,744 of return of capital [6]. There was no capital gain distribution [6]. Two years, two opposite answers, from the same fund under the same rule.

The table under this page prints both rows. The return-of-capital share is computed from the row’s own figures and labelled computed.

What NAV per share did

The financial highlights show the share price behind the payments. From inception on January 17, 2024 to December 31, 2024, NAV per share went from $50.17 to $49.32 [6]. The fund distributed $22.15 per share, and the reported total return was 52.74% [6].

For the fiscal year ended December 31, 2025, NAV went from $49.32 to $28.42 [6]. The fund distributed $21.63 per share, of which $16.04 was return of capital, and the reported total return was negative 3.45% [6]. Total return assumes every distribution was reinvested. The NAV column is what one share was worth before them.

The NAV erosion page puts every fund’s audited series side by side. This page prints this fund’s only.

Basis, in a taxable account and in an IRA

In a taxable account, the return-of-capital slice reduces the basis of the shares under section 301 [8]. The part in excess of basis is treated as gain from a sale [8]. A holder who bought at inception has a basis question that the 2025 return-of-capital figure moved and the 2024 one did not. The return of capital tax page walks the three tiers and the box 3 mechanics.

In a traditional IRA, the character is erased. Publication 590-B says distributions from a traditional IRA are taxed as ordinary income, apart from any nondeductible contributions [10]. The notice and the audited number never reach the return. The account owns the shares.

In a Roth IRA, a qualified distribution is not taxed. Publication 590-B sets two conditions: the 5-year period from the first Roth contribution, and one of the qualifying events it lists [10]. A separate 5-year period applies to each conversion [10]. Which account a fund like this sits in is the holder’s decision, and this page describes the mechanics only.

The calculator and the receipts

The ETF income calculator runs a position through the arithmetic. Shares, cost basis, a return-of-capital range the reader sets, and the account type go in. It reads the same figures this page prints, dated, and prints the same 2024 receipt. Nothing on it predicts the next payment.

The notice is an estimate the rule allows. The annual report is the character for a closed year. The 1099-DIV is what reaches the return. Three documents, and the first is the only one that arrives every week.