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Why Are Stock Dividends Generally Nontaxable? Under What Circumstances Are

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Why are stock dividends generally nontaxable? Under what circumstances are stock dividends taxable?


Definitions:

Fixed Amount

A specific, unchanging quantity of something.

Diminishing Returns

An economic principle that states as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot increase proportionally.

Negative Returns

A situation in which additional investment or effort results in a decrease in output or performance, contrary to typical expectations for growth or improvement.

Marginal Cost

The additional expenditure involved in producing one further unit of a product or service.

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