Discussion:Tax-exempt reinvested dividends?
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| Revision as of 18:03, 3 August 2009 Me and the Boss (Talk | contribs) (Or, did you mean) ← Previous diff |
Revision as of 15:52, 4 August 2009 LJACPA (Talk | contribs) (The latter. Oka) Next diff → |
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| + | {{ForumReplyPost|UserID=LJACPA|Date=4 August 2009|Text=The latter. Okay, so tax-exempt interest paid out in the form of dividends would be handled, for federal purposes, no differently than taxable dividends if they are reinvested and additional shares are acquired, correct? This does appear to be the case and I guess my ultimate question was whether this would also add to basis as a taxable reinvested dividend would. I couldn't find anything that supported this and I suppose I just assumed that if there were such a thing that by not being taxed that the TE dividends would not increase basis. Thanks.}} | ||
Revision as of 15:52, 4 August 2009
Discussion Forum Index --> Advanced Tax Questions --> Tax-exempt reinvested dividends?
Discussion Forum Index --> Tax Questions --> Tax-exempt reinvested dividends?
| 3 August 2009 | |
| Call me dumb, that's fine, just please tell me, is there such a thing? Thanks... | |
| August 3, 2009 | |
| A tax-exempt entity reinvesting dividends it receives? Sure.
No, you cannot decline to pay tax on dividend income simply because it is reinvested. | |
Me and the Boss (talk|edits) said: | 3 August 2009 |
| Or, did you mean a mutual fund that invests in municipal bonds and pays the tax exempt interest out in the form of dividends?
The dividends will be tax-exempt. They may be taxable for state income taxes depending on the underlying municipal bonds. Of course the dividends will never be qualified dividends. If the dividends are reinvested to acquire more shares of the fund, the new shares will have a tax basis equal to the amount of dividends reinvested. More? | |
| 4 August 2009 | |
| The latter. Okay, so tax-exempt interest paid out in the form of dividends would be handled, for federal purposes, no differently than taxable dividends if they are reinvested and additional shares are acquired, correct? This does appear to be the case and I guess my ultimate question was whether this would also add to basis as a taxable reinvested dividend would. I couldn't find anything that supported this and I suppose I just assumed that if there were such a thing that by not being taxed that the TE dividends would not increase basis. Thanks. | |
