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.
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The final determination of the source of all distributions in 2018, including the percentage of qualified dividend income, will be made by the Fund after Dec.
The final determination of the source of all distributions, including the percentage of qualified dividend income, will be made after year-end.
The qualified dividend benefit is meaningful to retirees who live off their investment income.
Those in the highest tax bracket will be subject to a 23.8 percent long-term capital gain and qualified dividend tax.
All or part of the distribution may be treated as long-term capital gain or qualified dividend income (or a combination of both) for individuals, each subject to the maximum federal income tax rate, which is currently 20% in taxable accounts for individuals (or zero depending on an individual's tax bracket).
Partnerships (including LLCs taxed as partnerships) pass qualified dividend income through to noncorporate partners, where the dividends are taxed at the favorable rates (Sec.
"Thus, from a tax planning perspective, it may make sense to hold investments that produce qualified dividend income, and to hold them long enough to produce long-term capital gains on sale."
However given the possibility of an expiration of the preferential United States federal tax rates on qualified dividend income after December 31, 2012, and that a significant amount of the shareholders take advantage of such preferential rates, the company opted to bring forward its dividend to December 2012.
Qualified dividend income would see an even larger increase, returning to ordinary income tax rates.
And since it is a qualified dividend, under current rules, it will be taxed at a 15% rate.
Section 1(h) (11), provides that net capital gain for purposes of Section 1(h) means net capital gain (determined without regard to section 1 (h)(11)) increased by "qualified dividend income." Qualified dividend income means dividends received during the taxable year from domestic corporations and qualified foreign corporations.
Under this scenario, any dividends repatriated to the United States from the operating company would not be eligible for qualified dividend rates (currently 15 percent) in the hands of the ultimate beneficial U.S.

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