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No because it's wrong. The correct way to say this is that by doing a buyback it allows stockholders to realize their taxes at a later point in time since capit
by dlp211 7y ago
No because it's wrong. The correct way to say this is that by doing a buyback it allows stockholders to realize their taxes at a later point in time since capital gains are only realized at the time of sale. Dividends are immediately taxed at the capital gains rate which is the same as the LTCG rate.
- georgeecollins 7y agoYou are right about the buyback allowing shareholders to delay the taxable event. But you are wrong that dividends are taxed at capital gains rate. They are taxed as income. Capital gains are taxed at capital gains rate (almost always lower) and they gain can be offset by losses. This is the main advantage of stock buyback.
- jonas21 7y agoI'm not an accountant, but I believe if the dividend comes from an American company, and you've held the stock for over 60 days, it's a qualified dividend and gets taxed at the long term capital gains rate.