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Subject:  Re: Hybrid/Other Annuities Date:  4/23/2014  5:29 PM
Author:  joelcorley Number:  35276 of 36693


I wrote, BTW, the pass-thru rule on qualified dividends is a significant reason to never to buy something like PFF (iShares S&P US Preferred Stock Index Fund) in a taxable account. This ETF pools qualified and non-qualified income and passes it all through as non-qualified dividends. A fine strategy in a tax-advantaged account, but a poor one in a taxable account.

To which you replied, I believe this is inaccurate. iShares provides a breakdown of qualified/nonqualified divs for use on your tax return:

For instance, here, PFF pays out almost 67% qualified dividend income, which you can claim on your tax return.

The more likely issue is that some *brokers* might not incorporate that information into their 1099s. But that's a broker issue, not an issue with the ETF structure itself.

I stand corrected.

Even so, a qualified dividend strategy is usually preferable (pun intended) in a taxable account. So while I might be wrong about the specifics, I'd still tend to avoid PFF and REITs in my taxable accounts because of the unqualified dividends and interest payments. With that said, I do have plenty of this stuff in my IRAs.

- Joel
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