[hopefulcpa28]

I always get confused between these:

Current E&P: Taxable Dividend

Accumulated E&P: Taxable Dividend

Return of Capital: Tax free and reduces basis of common stock

Capital Gain distribution: Taxable income as a capital gain

I understand the logic behind it, but I’m confused as to the rate shareholder will be taxed. Am I correcting in understanding that Taxable dividend will be taxed as ordinary rate…unless they qualify for 60-120-60 day period (then it will be a lower rate). Capital gains will be taxed based on whether it was long or short term.

I’m just confused between the rates…can someone explain it to me? Thanks:)

[hopeful_cpa]

you wont need to know the rates. but cap gains are a different rate as opposed to ordinary income. from my understanding the taxable dividend will be included in ordinary income which will be at the ordinary tax rate… but once again, you wont need to know the rates.

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[hopefulcpa28]

Yeah, I understand that I won't need to know the rates, but I'm trying to differentiate between these two: Taxable dividends and capital gain.

Taxable dividends will be included in ordinary income, but what about capital gain treatment? They won't be included in gross income…?

[Author]

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