qualifying dividends

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.

qualifying dividends

The dividends that meet Internal Revenue Service regulations for exclusion or partial exclusion from federal income taxation. For example, corporations are permitted to exclude a portion of all of the qualifying dividends received from stock owned in domestic corporations. There are no qualifying dividends for calculating individual income taxes.
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In particular, section 3 makes clear that taxpayers may not specifically identify qualifying dividends as either deductible or nondeductible in whole or in part.
Notice 2005-64 completes the IRS's Section 965 trilogy
Thus, prior to the 2004 Act, a CFC that was also a FPHC could not pay qualifying dividends, whereas a CFC that was also a PFIC, but not a FPHC could do so.
Dividends received from foreign corporations--recent developments change the landscape
Section 302 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) reduced the income tax rate for qualifying dividends received by individuals to 15% (5% for taxpayers in the 10% mid 15% tax brackets).
Which treaties qualify for the JGTRRA's special dividend rate?

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