Mustang77

Owning Oil in Royalty Trusts

SteveTN asks why it's best to hold oil trusts in a tax deferred account. The biggest reason, in my opinion, is that the "dividends" they pay out are fully taxable. They are not qualified dividends. Thus, they don't qualify for the qualified dividend tax rate (currently 15%) and will be taxed at your current marginal tax rate. The current highest rate is 35%.