Taxes on Dividends

Discussion in 'Taxes and Accounting' started by mskl, May 17, 2003.

  1. mskl


    I'm not a US resident (for tax purposes) and am intrigued as to how these new US tax laws might affect trading.

    Currently, any dividends I receive from US Corps are treated as business income and any divs I paid out are treated as an Expense. (in affect netting themselves out) If I paid out more divs in a year then it would simply show up as an Expense.

    How are US residents treated if they have paid out more? (Is it currently treated as an Expense or do you have to net it out against divs you received?)

    With the current dividend proposal, it seems unlikely that US residents would be able to treat any short dividends as Expenses because longs will no longer be taxed.

    any comments...
  2. I believe dividends on short sales decrease your basis. That is, they decrease the amount you received for the stock when you sold it short. You realize a reduced profit when you eventually buy the stock back.

    I'm talking about individual investors here. I'm sure it's different for traders who can mark their investments to market at the end of each year for tax purposes.