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Section 199A dividends are distributions from the profits of domestic real estate investment trusts (REITs) that qualify for a special 20% tax deduction. Investing in Section 199A dividends can ...
Dividends are a portion of a company’s profits issued to shareholders. They are typically paid quarterly. As they represent a share of the income of the company, dividends are taxable to ...
The tax implications of investing in REITs can vary given the type of REIT and the investor’s individual tax situation (we will explain taxes in a section below). Understanding the Mechanics of ...
The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced the rates to 5% and 15%, and extended the preferential treatment to qualified dividends. The 15% tax rate was extended through 2010 as a result of the Tax Increase Prevention and Reconciliation Act of 2005, then through 2012.
Dividends received by individuals (if the dividend is a "qualified dividend") are taxed at reduced rates. [63] Exceptions to shareholder taxation apply to certain nonroutine distributions, including distributions in liquidation of an 80% subsidiary [ 64 ] or in complete termination of a shareholder's interest.
Another case where income is not taxed as ordinary income is the case of qualified dividends. The general rule taxes dividends as ordinary income. A change allowing use of the same tax rates as is used for long term capital gains rates for qualified dividends was made with the Jobs and Growth Tax Relief Reconciliation Act of 2003. [1]
Real estate investment trusts (REITs) often pay high dividend yields and offer diversification from typical stocks.
In order to receive the tax benefit of a dividends received deduction, a corporate shareholder must hold all shares of the distributing corporation's stock for a period of more than 45 days. Per §246(c)(1)(A), a dividends received deduction is denied under §243 with respect to any share of stock that is held by the taxpayer for 45 days or less.