Company: GDV-PK
Filing Date: 2025-08-08
Form Type: N-14
Source: 0001829126-25-006008
Chunk: 3

Company: GABELLI DIVIDEND & INCOME TRUST
Filing Date: 2025-08-08
Form: N-14
Chunk 3
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 the distribution”) will be treated as a taxable dividend to the extent of Dividend Trust’s current and accumulated earnings and profits that is allocated to the distribution and will be taxable to Dividend Trust common shareholder as a distribution of ordinary income, long-term capital gain or a combination of both (generally depending on the character of Dividend Trust’s taxable income for the taxable year of the Transaction). The portion of the distribution that is treated as ordinary income may, depending on the circumstances, consist in whole or in part of “qualified dividend income” in the case of non-corporate Dividend Trust shareholders, in accordance with the rules described under the heading “Taxation”. To the extent that the amount of the distribution exceeds the amount of earnings and profits allocated to such distribution, the excess (if any) will first be treated as a non-taxable return of capital, reducing the Dividend Trust common shareholder’s tax basis in its Dividend Trust common shares accordingly, and, once that basis has been reduced to zero, any remaining amount will be taxable as gain realized from a deemed sale of Dividend Trust common shares. Foreign shareholders of Dividend Trust that participate in the Transaction will generally be subject to the same rules described under the heading “Taxation” for distributions to foreign shareholders of Preferred Trust, including the potential applicability of a 30% withholding tax on the portion of the Transaction distribution that is treated as an ordinary income dividend.

Each Dividend Trust common shareholder will take a fair market value tax basis in the Preferred Trust common shares received and will have a holding period for the Preferred Trust common shares that begins on the day following the date of the distribution.

The actual tax impact of the Transaction will be affected by a number of factors that are unknown at this time, including Dividend Trust’s final earnings and profits for the taxable year in which the distribution occurs, the fair market value of Preferred Trust’s common shares on the date of the Transaction, and the character of Dividend Trust’s taxable income for the taxable year in which the distribution occurs. Thus, a definitive calculation of the U.S. federal income tax impact of the Transaction will not be possible until after the end of the taxable year in which the Transaction occurs. Provided that Dividend Trust, as is expected, does not contribute securities with significant unrealized appreciation to Preferred Trust, the Transaction is not currently expected to result in the recognition of significant taxable gain (and thus earnings and profits) by Dividend Trust and therefore is not expected to increase significantly the total amount of taxable distributions received by Div