Qualified Dividend

Qualified Dividend

In the United States, a dividend eligible for capital gains tax rather than income tax. This is advantageous to the investor as capital gains are usually taxed at a lower rate than ordinary income. To become a "qualified" dividend, the security from which the dividend derives must be held for at least 61 days during a certain 121-day period (for common stock) or for at least 90 days during a corresponding 181-day period. Also, the corporation paying the dividend must either be American or at least have stock readily tradable in American securities markets. See also: Ordinary dividend.
References in periodicals archive ?
Identifying qualified dividends and helping taxpayers meet the requirements for qualified dividend status are valuable client services.
Based on the company's current projections for the fiscal year ending 30 June 2015, its preferred stock dividends are expected to be treated as qualified dividend income and that a portion of its cash dividends on common stock will be treated as a return of capital and the remainder as qualified dividend income.
corporation or a qualified foreign corporation that are not specifically excepted from qualified dividend treatment on stock that a taxpayer has held for a certain period.
Unless Congress takes action to extend the current rates, capital gains tax rates will increase from 15 percent to 20 percent, and the maximum tax rate for qualified dividend tax rates could nearly triple from 15 percent to 39.
Adjusted net capital gain also includes qualified dividend income (discussed below).
taxpayers to convert nonqualified dividend income into qualified dividend income.
For Federal income tax purposes, approximately 78% of the 2011 distributions will be characterized as long-term capital gains and 22% as qualified dividend income.
As in 2010, late-year congressional negotiations could lead to extensions of current capital gains and qualified dividend tax rates.
This has been greatly alleviated with the qualified dividend rate now at 15 percent, but I feel that in substance there was and still is a double tax in effect.
For Federal income tax purposes, approximately 74% of the 2011 distributions will be characterized as long-term capital gains and 26% as qualified dividend income.
Gain from the seller's receipt of cash or other "boot" in the exchange, whether treated as qualified dividend income or capital gains will still be taxed at the maximum 15 percent rate.
For Federal income tax purposes, approximately 93% of the 2011 distributions will be characterized as long-term capital gains and 7% as qualified dividend income.

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