Fay is a new tax preparer. she has been researching various types of nontaxable distributions. Which of the following statements is incorrect?

A. A return of capital reported on form 1099-DIV will reduce a taxpayers stock basis.

b. since liquidating dividends are return of capital, they will reduce a taxpayers stock basis.

c. a liquidating dividend will be reported as a taxable capital gain if the basis of the taxpayers stock has already been deducted to zero.

d.since an exempt-interest dividend paid by a mutual fund is not taxable, it will not be reported on any form by taxpayer