Alabama state tax says that you can exempt part of interest income as follows.
"The percentage of dividends derived from interest on United States obligations and/or Alabama municipal obligations which are received from a regulated investment company."
For dividend income it says this.
"All dividends, including liquidating dividends, you received in 2020 are fully taxable."
From this dividend income, it says all dividends are fully taxable but dividends derived from interest is not. I've never heard of "dividend derived from interest." What does this mean? How is that different from a regular dividend?
The form clearly only allows exemption under interest and not under dividend under column A. So I really would like to know what the difference is. I really don't understand. I never hear of dividend from interest before.
