Re: Owning dividend stocks.
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Dividends from REIT's (and some other tax-advantaged investments) are not qualified dividends. For other stocks, if they are sold soon after the dividend, then that dividend is not qualified.
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Not quite. You get qualified treatment (which is favorable) if you hold the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. So you could get the dividend, sell the stock a day or two later, and still get qualified dividend treatment as long as you had held the stock for at least 60 days prior to the dividend.
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So a mutual fund with a lot of turnover is likely to have a lower fraction of its dividends be qualified. Interest on bonds and short-term capital gains realized by a mutual fund are paid to you as a "dividend"; but these are not qualified dividends.
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Yes. Active trading in mutual funds can generate large tax bills, even if the fund had a negative return for the year. On the flip side, it's possible to buy into a mutual fund with very long-held positions that have appreciated substantially over a number of years. If the fund were to liquidate thost positions (like Sequoia did with some of its Berkshire Hathaway), that would generate taxable gains even though you had just bought the fund (and didn't participate in the runup of the underlying shares).
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