Time to distribute corporate earnings? Taking advantage of the lower tax rate on dividends received. (from The Tax Adviser)

The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) reduced the individual tax rate on corporate dividends received to 15% for individuals in the 25%, 28%, 33% and 35% tax brackets (5% (0% in 2008) for individuals in the 15% and 10% income tax brackets); this affords some planning strategies for closely held corporations that want to reduce their accumulated earnings and profits (E&P). CPAs should become aware of some of these opportunities.

OVERVIEW

The bane of corporate taxation always has been the double taxation of corporate earnings. So, this may be a good time for some corporate taxpayers to minimize ("bail out") E&P by distributing …