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A closely held C corporation paid a cash dividend to the…

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A closely held C corporation...
A closely held C corporation paid a cash dividend to the sole shareholder. Is that Dividend considered "qualified dividend" subject to the lower 15% dividend tax rate?... Read full answer
A closely held C corporation paid a cash dividend to the sole shareholder. Is that Dividend considered "qualified dividend" subject to the lower 15% dividend tax rate?
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Answered in 6 minutes by:
7/9/2015
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 38,386
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Most likely - yes - these are "qualified dividends"
For a definition of qualified dividends, refer to Publication 550, Investment Income and Expenses.
http://www.irs.gov/pub/irs-pdf/p550.pdf
To qualify for the Qualified dividends rate, all of the following requirements must be met.
The dividends must have been paid by a U.S. corporation or a qualified foreign corporation. A foreign corporation is a qualified foreign corporation if it meets any of the following conditions.
The corporation is incorporated in a U.S. possession.
The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. For a list of those treaties, see Table 8-1.
The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States.
The dividends are not of the type listed below - the following dividends are not qualified dividends.
Capital gain distributions.
Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U.S. building and loan associations, U.S. savings and loan associations, federal savings and loan associations, and similar financial institutions. (Report these amounts as interest income.)
Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year.
Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation.
Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property.
Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends.
Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends.
You meet the holding period.
Holding period. You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. Instead, the seller will get the dividend.
Lev
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Category: Tax
Satisfied Customers: 38,386
Experience: Taxes, Immigration, Labor Relations
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