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The dividends are taxed as regular income, which is 28% (or whatever your marginal rate is).

The captial gain (the increase in price) is taxed at 20% (10% if you're in the 15% tax bracket).
That assumes that you hold it for at least a year-plus-one-day (to make it a long-term capital
gain).

So, if you are in the 28% bracket, you would want to subtract 28% of dividends plus 20% of the
difference in stock prices to cover your taxes.

There is no guarantee that this would work perfectly, since a good year might slip you into a
higher bracket.


Keeping in mind , since the FF is a Long Term strategy,
that these numbers are correct today. May be different
tomorrow. And will almost certainly be different 5yrs
from now . Which is just to say that tax-planning can
never be Precise.

FWIW --mine's in a taxable acct and i plan to pay the taxes
from outside the F4 bucket.


jp
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