Stock distributions are always tax-free to the recipient.

Question

Quizplus · Accepted Answer

Stock distributions may or may not be tax-free to the recipient, depending on the circumstances. If the distribution is classified as a qualified dividend, it may be taxed at a lower rate. However, if the distribution is classified as non-qualified, it may be subject to regular income tax rates. Additionally, if the distribution is a return of capital, the amount may not be taxable initially, but it may affect the cost basis of the stock and result in taxes when shares are sold in the future.

Stock Distributions Are Always Tax-Free to the Recipient