Qualified dividend holding period questions

[cbco7]

As part of a partnership full withdrawal from an investment club, some shares of a specific stock were transferred from the club to my personal brokerage account on November 6, 2019.  The ex-dividend date for this stock was 12/13/2019, and a dividend was paid on 12/30/2019. I still own the stock shares as of 3/5/2020.

A) Brokerage statement classifies it as qualified, but would it be correct that this is not a qualified dividend because I did not hold it in my personal brokerage account for 60 days prior to the ex-dividend date? Or since I was a partner in the club and this stock is part of the buyout of my partnership stake, does the holding period applicable to the club apply to the transferred  shares in my brokerage account?

B) General question about dividend holding periods - for late-in-the-year ex-dividend dates, does the 121-day requirement extend into the next tax year? In other words, if someone bought a stock and met the 60 days prior to the ex-dividend date requirement, but there were not enough days left in 2019 to meet the 121-day requirement, would that dividend de facto be not qualified for the 2019 tax year? Or, for the purposes of the 2019 tax filing, does the holding period extend into 2020 if you don't sell the stock before the end of the total of 121 days?

IRS pub. 550 did not address this. Thank you in advance.

[MinhT1 · Accepted solution]

In order to treat your dividends as qualified dividends, the IRS requires that you hold your stock investment for more than 60 days during the 121-day period that begins 60 days prior to the ex-dividend date—which is the day after a corporation's board declares a dividend payment to shareholders.

By this definition, the dividends received from the stocks transferred from the investment are qualified dividends.

The 121-day period does not need to fall entirely within the tax year. It can be between 2 tax years and as long as your holding period is at least 60 days within the 121-day period, the dividends are qualified.

[cbco7]

MinhT1, just for clarification, did you mean "By this definition, the dividends received from the stocks transferred from the investment club are qualified dividends"? In other words, because I was a partner, the holding period is derived from the club's date of purchase, and not the date the stock was transferred to me?

[MinhT1]

No.

What I meant by that is: The ex-dividend date was 12/13/2019. The 121-day began on 11/13/2019 and ended on 01/13/2020. During that period, you held the stock the whole time, which is more than 60 days. So the dividends are qualified.

[cbco7]

MinhT1, got it, thanks!