I am the Executor for the Estate of an individual that recently passed away, and he owned a small but long-lived C Corporation 100% (Sole Shareholder.) Last year, he made a Dividend distribution from the Corporation to himself and I am working on his personal tax return. He was well over 65, and in years preceding the Dividend distribution, was only taking Social Security, usually ending with a Zero Tax Due return.
The company has been "quiet" in recent years and has had no significant recent income, thus the distribution has been sourced by historical retained earnings.
Given this situation, is it likely that the recent Dividend Distribution will be considered as Qualified, resulting in a lower tax rate? If the Dividends are not "automatically" considered Qualified, is there additional information that I can gather to support the case for Qualified Distributions?
Thank you in advance for your help!
