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Acct412 gdb2 - taxes of the dividends(Willis Hoffman...

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12 th July 2011 Module 3, Group 3, Question 2 RE: Evaluate when dividends are taxable, who they are taxable to, and the related tax consequences or benefits. Dividends are taxable when they fall under ordinary income or qualified dividends. Dividends are taxable to “partnerships, and S corporation, C corporations [and] are subject to” “double taxation effect” (Willis, Hoffman, Maloney, & Raabe, 2010). These dividends have been paid to the owners or employees after it has already been taxed by the corporations. The owners or employees then have to include the income form the dividends on their taxes as well. The dividends are taxed at the same tax rate as ordinary income is taxed. There are a couple of categories that dividends fall under it is ordinary income, qualified dividends, and nonqualified dividends. To qualify as a dividend must have been held for more than sixty days before it received the dividend. Corporations can also get “dividends received deduction” to help with the
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Unformatted text preview: taxes of the dividends (Willis, Hoffman, Maloney, & Raabe, 2010). The deduction rate depends upon the “percentage of Ownership by Corporate Shareholder” (Willis, Hoffman, Maloney, & Raabe, 2010). The related tax consequences and or benefits depend on several factors. “The tax rate for these dividends is 15 percent for most, a large reduction from the otherwise highest 35 percent rate” (Friedman, 2009). The alternative minimum tax rate will result in the rate of regular taxes. Reference: Friedman, L. D. (2009). Smart Business Network Inc. Retrieved 07 12, 2011, from Tax consequences of your investments: http://www.barneswendling.com/pdf/barnes %20wendling%2012_09%20reprint.pdf Willis, E., Hoffman, J. W., Maloney, D. M., & Raabe, W. A. (2010). South- Western Federal Taxation Comprehesive Volume . Mason, OH: South-Western Cengage Learning....
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