When Accrued Dividends Become Capital Gains
- Topics:
- Dividends
- Tags:
- Bond,
- CFO Publishing Corp.,
- Dividend,
- Finance,
- Financial Accounting,
- Financial Planning,
- Operational Accounting,
- Payment
- Source:
- CFO Publishing
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Overview: From the executive summary: ‘When a bond is purchased and sold between interest payment dates, the portion of the purchase price attributable to interest that has accrued to the date of purchase is treated as interest income to the seller of the bond. As a result, the buyer treats the payment as an offset to the interest coupon to which the accrued interest is attributable. However, dividends on stock do not accrue as interest accrues. Instead, the dividends represent ordinary income to the shareholder of record when actually, or constructively, received by the shareholder. The paper explores this issue in detail.
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Format: HTML | Date: Aug 2002 | Pages: 2
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