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.'

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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.

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