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Taxation of Corporate Dividends

Relatively recent revisions to the Code have modified the tax treatment of dividends. Put your Internet research skills to use explain these changes and their consequences.

In particular,
(1) what dividends are as defined by the Code;
(2) what the recent changes effectively do (and how it was different from the prior approach to the taxation of dividends); and
(3) what the changes sought to achieve (in other words--why was the change made?).

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1. What dividends are as defined by the Code?

The dividends defined by the Code are qualified dividend income paid to individuals during a year from domestic corporations) both publicly traded and private) and foreign corporations (www.nysscpa.org)

2. What do the recent changes effectively do (and how was it was different from the prior approach to the taxation of dividends?

The act changed the tax rate that applies to dividends in an indirect manner. The act increased the net capital gains by qualified dividend income for purposes of applying the maximum capital gains rate and the act ...

Solution Summary

The following problem helps with questions regarding the tax treatment of dividends.

$2.19