A capital gain dividend is any distribution that is designated as such by a regulated investment company in a written notice mailed to its shareholders not later than 60 days after the close of its taxable year. It is treated as a capital gain by the shareholders.
Nontaxable dividends are dividends from a regulated investment company (mutual fund) that were earned by the fund as interest from tax-exempt state and municipal debt obligations and other exempt obligations. For dividends to be tax-free, at least 50% of the regulated investment company's assets must be invested in tax-exempt obligations.
A pass-through entity is a non-taxable business structure where income or expenses are passed directly to the owners, retaining their original character.
A Regulated Investment Company (RIC), such as a mutual fund or Real Estate Investment Trust (REIT), is eligible under Regulation M of the Internal Revenue Service to pass capital gains, dividends, and interest earned on fund investments directly to its shareholders to be taxed at the personal level, thereby avoiding double taxation on corporations and stockholders.
A Regulated Investment Company (RIC) is a type of investment company in the United States that is eligible to pass through income to shareholders without having to pay taxes at the corporate level, provided it complies with certain regulatory requirements outlined by the Internal Revenue Code.
