Company: GDV-PK
Filing Date: 2025-08-08
Form Type: N-14
Source: 0001829126-25-006008
Chunk: 104

Company: GABELLI DIVIDEND & INCOME TRUST
Filing Date: 2025-08-08
Form: N-14
Chunk 104
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 a suspension of distributions might prevent Preferred Trust from distributing 90% of its investment company taxable income as is required in order to avoid corporate-level U.S. federal income taxation on all of its income, or might prevent Preferred Trust from distributing enough income and capital gain net income to avoid imposition of corporate-level income or excise taxes.

Because Preferred Trust may invest in foreign securities, its income from such securities may be subject to non-U.S. taxes. Preferred Trust intends to invest less than 50% of its total assets in foreign securities. As long as Preferred Trust continues to invest less than 50% of its assets in foreign securities, Preferred Trust will not be eligible to elect to “pass-through” to its shareholders the ability to use the foreign tax deduction or foreign tax credit for foreign taxes paid with respect to qualifying taxes.

Taxation of Shareholders

Distributions paid by Preferred Trust from its investment company taxable income generally are taxable as ordinary income to the extent of Preferred Trust’s current or accumulated earnings and profits (“ordinary income dividends”). Provided that certain holding period and other requirements are met, such distributions (if properly reported by Preferred Trust) may qualify (i) for the dividends received deduction available to corporations, but only to the extent that Preferred Trust’s income consists of dividend income from U.S. corporations and (ii) in the case of individual shareholders, as qualified dividend income eligible to be taxed at long term capital gain rates to the extent that Preferred Trust receives qualified dividend income. Qualified dividend income is, in general, dividend income from taxable domestic corporations and certain qualified foreign corporations (e.g., generally, foreign corporations incorporated in a possession of the United States or in certain countries with a qualifying comprehensive tax treaty with the United States, or whose stock with respect to which such dividend is paid is readily tradable on an established securities market in the United States). A qualified foreign corporation does not include a foreign corporation that for the taxable year of the corporation in which the dividend was paid, or the preceding taxable year, is a PFIC. If Preferred Trust lends portfolio securities, the amount received by Preferred Trust that is the equivalent of the dividends paid by the issuer on the securities loaned will not be eligible for qualified dividend income treatment. There can be no assurance as to what portion of Preferred Trust’s distributions will be eligible for the dividends received deduction or the reduced rates applicable to qualified dividend income.

Properly reported distributions of net capital gain (i.e., the excess of net long term capital gain over net short term capital loss) (“capital gain distributions