45 Day Rule Calculator

Calculate Eligibility for 45 Day Rule Tax Credit



Formula

The formula to calculate the eligibility for the 45 Day Rule tax credit is:

\[ Eligibility = (H \geq 45) \text{ AND } (H \leq (D + 45)) \]

Where:

What is a 45 Day Rule?

The 45 Day Rule is a regulation in the United States tax code that pertains to the holding period for preferred stocks or bonds before a dividend or interest payment is made. According to this rule, an investor must hold these securities for at least 45 days during the 91-day period beginning 45 days before the ex-dividend date to qualify for a tax credit on the dividend or interest received. This rule is designed to prevent investors from buying securities just before a dividend is paid and then selling them immediately afterward, essentially earning income without any significant investment risk.

Example Calculation

Let's assume the following values:

Using the formula to calculate the eligibility for the 45 Day Rule tax credit:

\[ Eligibility = (50 \geq 45) \text{ AND } (50 \leq (10 + 45)) = \text{True} \]

The investor is eligible for the 45 Day Rule tax credit.