The dividends always have tax implications unless your investment is held in a qualified tax-exempt account. There are three forms of dividends:
• Return of Capital Dividends: These types of dividends are not taxed and instead reduce your tax basis for future capital gain consideration
• Capital Gain Dividends: These types of dividends are generally taxable at long-term capital gain rates)
• Dividends from Current or Accumulated Earnings: These types of dividends are generally taxed at ordinary income rates.