Investment Taxation

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Taxation Of Dividends
Dividends are distributions of money, stock, or other property paid by a corporation. Dividends may also be received through a partnership, an estate, a trust, or an association that is taxed as a corporation. Dividends and other distributions received as a beneficiary of an estate or trust are generally taxable income. In certain circumstances, part of a child's investment income may be taxable in the hands of the parent(s).

Taxation Of Capital Gains
Gains made on the sale of property are taxable as capital gains; gains made in the course of trading are more likely to be taxable as business income. Many types of 'trade' (meaning, often, exchange) however are classified as sales.

For a trade (exchange) to be non-taxable, it must meet all six of the following (somewhat abbreviated) conditions:

• The property must be business or investment property;
• The property must not be held primarily for sale;
• The property must not be stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest, including partnership interests;
• There must be a trade of like property;
• The property to be received must be identified in writing within 45 days after the date of transfer the property given up in the trade;
• The property to be received must be received by the earlier of the 180th day after the date on which the property given up in the trade is transferred, or the due date, including extensions, for the tax return for the year in which the transfer of the property given up occurs.

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