 The dividend income is usually gonna be income that we're receiving from investments. So we're investing, we're receiving a return on the investments. Now remember, you gotta kinda keep separate your investments in your mind. Those that are under the umbrella of, say, an IRA or 401K plan, which is where most people have their investments because when you have money in there, you usually have it into the stock market and whatnot and bonds, but they're usually gonna be in mutual funds and you have a tax deferral situation most of the time which we'll talk about at a later point in time. And then you might have stocks and bonds that are not under the umbrella of the IRA or 401K or a retirement type of plan. And in that instance, when you have a taxable event, possibly you're gonna be receiving dividends or interest or possibly you sell the stocks, then you could have a taxable event at that point in time. So that's the first thing to kinda keep in mind. You could invest in an individual stock. You could invest in mutual funds. Mutual funds might be a bunch of stocks that are kind of pooled together as the general concept. We might talk about that more in future presentation. Presentation! That's when we get into IRAs and 401K type of investments and deferrals. And you could then have those same kind of investments under the umbrella of something like an IRA or a 401K plan, which could have different kind of tax implications for it. But let's think about a situation where we don't have an IRA or a 401K plan. We're just investing in stocks for a corporation. And then the corporation is gonna earn money. When the corporation earns money, the corporation is a taxable entity in and of itself. So it's gonna be paying taxes on the corporate level. That's one of the beauties of the corporation entity. It was actually a fairly recent still invention to have a corporation and apply to the corporation attributes that are usually only applied to individuals, such as it basically owning property and being able to pay tax. And then they're gonna pay the earnings from the corporation to the owners. So here's us, the owner over here. And once again, IRS is gonna basically step in the middle of that transaction and take some of the money going there because now we're gonna call it income to the individual. So you can see this is why we have this double taxation situation. The corporate entity in and of itself is gonna be a taxable entity. And so they have to pay taxes when they earn income on the corporate level. And then they're giving that money to the owner of the corporation in the form of dividends. And now we're calling that a taxable event income to the investor at that point. Now, if you're a small business, you can clearly see that this would be something that would be annoying. So if you're a small business, for example, and you're a sole proprietor and you were trying to get a corporation of some kind, possibly for liability protection, before they came up with some of these other entities like an S corp or an LLC, the option would be to be a C corporation. And if you were just a sole proprietor that became a C corporation, this structure would be quite annoying because you'd say, okay, now I'm a corporation. The corporation now has to file a separate tax return instead of a schedule C, right? And then they pay taxes to the government on the corporate level. They already paid the taxes. And then when I, the owner of my corporation pull the money out, not in the form of draws, but in this case, in the form of dividends, because that's what it's called for a corporation which would have to be the owner, I mean, the management of the corporation, the board would have to decide on the dividends. But when the money comes out to the owner, it would be taxed again. And you could see that would be quite an annoying situation if you were thinking about running your business as like a small sole proprietor that became a C corporation. That's why they came up with S corporations and LLCs to try to avoid that double taxation while still having some of the liability protection and whatnot. Now, for large corporations, when you invest in like publicly traded companies, like most people do, usually through mutual funds and possibly using 401K plans and IRAs and whatnot, retirement funds. But when you invest into publicly traded companies, the idea is that you are a passive investor. You're not really actively involved in the day-to-day decision-making, although you still have the capacity possibly to vote for say the board of directors who would then be hiring the management to help make the decisions. But usually with these very large publicly traded companies, our share in influence is so low that we're kind of passive investors, which is one of the arguments that is used to say and justify this kind of double taxation issue. But this is one of the debates that always is gonna come into play in terms of should we be taxing in this double taxation way and is it beneficial to the stock market? What if we taxed these dividends at ordinary income rates? Well, that might lower the amount of money that people are willing to put into the stock market, which could be bad for the economy and so on and so forth. So this is one of the kind of areas that are debated oftentimes from a policy standpoint, but you can see the general concept as to why the dividends might then be tried to taxed at at least a lower rate possibly because of that double taxation. Okay, so then we have the types of dividends. We've got the ordinary dividends and the qualified dividends. And we have to have this definition between the two because we might provide a preferential tax treatment to the dividends that are the qualified dividends. So you might get a 1099 div. This would be coming from the financial institutions, possibly some of the same financial institutions that you get interest income from. So you might have like a 1099 div and a 1099 INV coming from similar types of financial institutions. And it might not look exactly like this, but the box names will basically be the same. So sometimes the financial institutions will format them, however they want to format them. The main two boxes are gonna be box one A and one B. Box one A is the total ordinary dividends. Box one B is the qualified, the portion of the dividends up top that are gonna be the qualified dividends, which might allow you to have some preferential tax treatment for them. Then we've got the total capital gain distributions. This would be distributions that were not qualified as dividends, but basically our capital gains instead of dividends possibly because they're not coming out of the retained earnings, but rather coming out of the corporate, the investments that people have made into the stocks. So then you'd have to pay taxes and that would possibly go to like a Schedule D instead which we'll talk about later. Unrecaptured section 1250. So you've got some more of these lines which usually most soltowers will help you to kind of populate these into the system if they're applicable. Section 1202 game, collections, section 879, ordinary dividends, sections 879 capital gains, non-dividend distributions, federal income tax withheld. Now oftentimes you wouldn't be withholding from the dividend distributions for most people, but if you're in retirement, you might ask for withholdings in a similar way as your W-2 withholdings and use that as a form of payment, but you'll see that a lot less common here than with distributions from a W-2 or with distributions from like a retirement plan, for example. Section 199A dividends, investment expenses, foreign taxes. So sometimes you're gonna have some issues if there are investments in foreign countries where you got foreign taxes paid, which most soltower will help you to kind of determine where to populate that. And then cash liquidation distributions, non-liquidation distributions, exempt interest dividends, special private activity and state information on down below.