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Boise Idaho Business Guide: Short-Term Assets

Yes. Distributed profits in an Idaho C Corporation are paid out to owners/shareholders through a dividend (1099-DIV) form. If the dividend is qualified, then it is taxed at a reduced rate of 15-20%. This money is not subject to self-employment taxes, nor does it get taxed as ordinary income.

Qualified dividend requirements:

  • Must be issued by a U.S. corporation, or by a foreign corporation that readily trades on a major U.S. exchange, or by a corporation incorporated in a U.S. possession.
  • The shares must have been owned by you for more than 60 days of the “holding period.” The holding period is defined as the 121-day period that begins 60 days before the ex-dividend date, or the day on which the stock trades without the dividend priced in.

Always excluded from being qualified:

  • Capital gains distributions
  • Dividends on bank deposits
  • Dividends held by a corporation in an Employee Stock Ownership Plan (ESOP)
  • Dividends paid by tax-exempt corporations

 

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