Art likes to invest his spare cash in the stock market. In the past, he has focused on growth stocks and long-term value to take advantage of the preferential tax rate on long-term capital gains. He recently learned that this rate is also available for dividend income. However, he is confused by his brokerage statement, which lists both qualifying dividends and nonqualifying dividends. For Art’s benefit, investigate the requirements under which dividends qualify for the preferential tax rate. Write a letter to Art communicating the results of your research.
