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I've done some reading, and I'm not positive on the answer (and couldn't find it in the FAQ).

It appears that you have to pay capital gains tax on dividends. Do you still pay the capital gains even if reinvest the dividend in the company?

I have a really nice company that I think will give me an average of 20% gain a year (actually, I think it will be higher over the next year) and it fits the fools small/mid-cap ideal in almost every way. The stock, by the way, is Anthracite Capital, Inc (NYSE:AHR).

The problem is, most of that gain is through a dividend. The stock is currently at 7 3/8 a share and the dividen is $1.16/share. I'd reinvest this in the company, but if I have to pay short-term cap-gains on it, that reduces my interest in the company quite a bit, as that would be a big chunk of my 20-25% that I expect to make each year off of it.

Thanks for any help.

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