Question

In: Finance

If dividends are treated as 'qualified', they are taxed at the more favorable capital gains rates...

If dividends are treated as 'qualified', they are taxed at the more favorable capital gains rates than at ordinary income rates. Discuss the requirements for dividends to be treated as 'qualified dividends.'

Solutions

Expert Solution

A qualified dividend is a dividend paid by an American corporation or a qualified foreign entity.

You must have held the stock for which the dividend was paid for at least 60 days within the 121-day period that ends 60 days prior to the ex-dividend date. If the ex-dividend date is Dec. 1, for example, then you must have owned the stock for at least 60 days during the period between June 3 and Oct. 2.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Tax rates on dividends and capital gains differ across investors for a variety of reasons including...
Tax rates on dividends and capital gains differ across investors for a variety of reasons including ________. Select one: A. investment horizon B. income C. tax jurisdiction D. all of the above
Capital gains get preferential treatment for individuals.Discuss how cap gains are determined and taxed for individuals.
Capital gains get preferential treatment for individuals.Discuss how cap gains are determined and taxed for individuals.
Interest income, dividend income, and capital gains income The textbook refers to interest income being taxed...
Interest income, dividend income, and capital gains income The textbook refers to interest income being taxed as ordinary income. Explain what is meant by ordinary income and what this means for tax purposes. (1 mark) Explain why dividend income may have a preferred tax treatment. (1 mark) Explain the difference between a capital gain and a taxable capital gain by defining the percentage of capital gains (often referred to as the inclusion rate) an investor is taxed on. (1 mark)
During the current year, Ron and Anne sold the following assets: (Use the dividends and capital gains tax rates and tax rate schedules.)
During the current year, Ron and Anne sold the following assets: (Use the dividends and capital gains tax rates and tax rate schedules.) Capital Asset Market Value Tax Basis Holding Period L stock $ 53,000 $ 42,500 > 1 year M stock 31,000 40,500 > 1 year N stock 33,000 23,500 < 1 year O stock 29,000 34,500 < 1 year Antiques 10,000 5,500 > 1 year Rental home 303,000* 91,500 > 1 year *$30,000 of the gain is 25...
The expected pretax return on three stocks is divided between dividends and capital gains in the...
The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock Expected Dividend Expected Capital Gain A $0 $10 B 5 5 C 10 0 a. If each stock is priced at $145, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 45% (the effective tax rate on dividends received by corporations is 10.5%), and...
A. The expected pretax return on three stocks is divided between dividends and capital gains in...
A. The expected pretax return on three stocks is divided between dividends and capital gains in the following way: stock expected dividend expected capital gain A $0 $10 B $5 $5 C $10 $0 Required: a. If each stock is priced at $145, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is...
The expected pretax return on three stocks is divided between dividends and capital gains in the...
The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock Expected Dividend Expected Capital Gain Stock Expected Dividend expected capital gain a 0 10 b 5 5 c 10 0 A $0 $10 B 5 5 C 10 0 a. If each stock is priced at $100, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying...
The expected pretax return on three stocks is divided between dividends and capital gains in the...
The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock Expected Dividend Expected Capital Gain A $0 $10 B 5 5 C 10 0 Required: a. If each stock is priced at $135, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%),...
The expected pretax return on three stocks is divided between dividends and capital gains in the...
The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock Expected Dividend Expected Capital Gain A $0 $10 B 5 5 C 10 0 Required: a. If each stock is priced at $200, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%),...
The expected pretax return on three stocks is divided between dividends and capital gains in the...
The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock Expected Dividend Expected Capital Gain A $0 $10 B 5 5 C 10 0 Required: a. If each stock is priced at $175, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%),...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT