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Tax rates for redemptions versus dividends after law change

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What recent law change regarding dividends made the "redemption versus dividend" issue not so important anymore? How did it make it not so important anymore?

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Solution Summary

The 245 word solution discusses a tax law that changed the approach to taking dividends as opposed to redemptions, particularly from closely-held corporations. The cited explanation lists exceptions for what is not a dividend and then states the tax rates applicable for each.

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Qualified dividend income received after 12-31-2002 has been taxed at the same rate used to calculate an individual?s capital gains tax ? at 15% maximum rate. Prior to 2003, dividend income was taxed at ordinary income rates.

There are a list of exceptions to what is qualified dividend income, including whether the income could be characterized as interest rather than a distribution of profits. ...

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