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True for ordinary dividends, but almost all stock dividends meet the criteria to be treated as qualified dividends, taxed at capital gain rates. For example, in
by _delirium 7y ago
True for ordinary dividends, but almost all stock dividends meet the criteria to be treated as qualified dividends, taxed at capital gain rates. For example, in Vanguard's S&P 500 index fund, about 98% of dividends are qualified [1]. Of commonly traded classes of stocks, only real-estate funds mostly pay out ordinary dividends.
[1] https://advisors.vanguard.com/VGApp/iip/advisor/csa/investments/taxcenter/yeartodate https://advisors.vanguard.com/VGApp/iip/advisor/csa/investme...
- jjeaff 7y agoBut you are forgetting the fact that the corporation will have to pay corporate income tax on that money before they can use it to pay your dividend.
- wahern 7y agoThat's true, regardless. They paid tax earning that $100M. What they do after is irrelevant, as neither dividends nor buybacks are tax deductible.
- jjeaff 7y agoNo, they didn't necessarily pay tax earning that 100m. See double irish sandwich and other modern tax avoidance strategies allowing companies like apple to hold infinite amounts of cash in overseas accounts tax free.