Are there any tax implications for investors holding the preferred depositary shares versus common stock?

Short answer:

Both the $0.80 common‑stock dividend and the $0.50 preferred‑depositary‑share dividend that Jackson Financial Inc. (NYSE: JXN) announced are cash dividends that are taxable to the recipient in the year they are paid (2025). The tax treatment is broadly similar for the two classes of shares, but there are a few nuances that can affect the effective tax rate for each type of investor.

Below is a step‑by‑step breakdown of the key tax considerations for investors who hold the common shares versus the preferred depositary shares (JXN PR A), based on the information in the news release and the general U.S. tax rules that apply to corporate dividends.

1. What the news tells us

Both are cash dividends – not stock splits, not special distributions, not capital‑gain payouts.

2. General U.S. tax rules for cash dividends

3. Specific nuances for common stock (JXN) shareholders

1. Taxable as ordinary income – The $0.80 per share cash dividend is treated as non‑qualified dividend income.
   
2. No special basis adjustments – Because the dividend is paid in cash, it does not affect the cost basis of the common shares.
   
3. Potential for “return of capital” – If Jackson ever classified a dividend as a return of capital (unlikely for a BDC), the tax treatment would shift to a capital‑gain calculation. The current press release does not indicate that.
   
4. Holding‑period requirement – Even though the dividend is non‑qualified, the holding‑period rule (must hold the stock for > 60 days during the 121‑day period surrounding the dividend) still matters for qualified‑dividend eligibility. Since the dividend is non‑qualified, the rule is moot here.

4. Specific nuances for preferred depositary shares (JXN PR A) shareholders

1. Same ordinary‑income treatment – The $0.50 per depositary share cash dividend is also taxed as non‑qualified dividend income at the shareholder’s marginal rate.
   
2. Depositary receipt vs underlying preferred share – A depositary receipt (DR) is treated for tax purposes the same as the underlying security it represents. The dividend is considered paid by the issuer (Jackson Financial) to the holder of the DR, so the tax reporting is identical to owning the underlying preferred share directly.
   
3. Potential “preferred‑stock” classification – In some cases, preferred‑stock dividends can be treated as interest (if the preferred is structured as a fixed‑rate debt instrument). However, Jackson’s preferred shares are equity‑type (they are listed as “PR A” on NYSE), so the dividend is still a dividend, not interest.
   
4. No impact on basis – As with the common dividend, the cash payment does not change the cost basis of the depositary shares.
   

5. How the tax rate may differ in practice

In short, the effective tax rate will be the same for a given investor who holds either class, assuming the investor’s tax situation (filing status, marginal rate, state residency, account type) does not change.

6. Practical steps for investors

1. Confirm receipt of Form 1099‑DIV after September 25 2025.
   
2. Report the dividend on Schedule B (Form 1040) as “Ordinary dividends.”
   
3. If you hold the shares in a brokerage account, the broker will usually pre‑populate the dividend entry on your tax return.
   
4. If you hold the shares in a tax‑advantaged account (IRA, 401(k), etc.), the dividend is tax‑deferred and you do not report it on your 2025 return.
   
5. Foreign investors should check the applicable tax treaty to see whether the 30 % withholding can be reduced; they will receive a Form 1042‑S instead of a 1099‑DIV.
   
6. State tax filing – Add the dividend to the appropriate line on your state income‑tax return (most states treat dividend income the same way as the federal return).
   

7. Bottom line

• Both the common‑stock dividend ($0.80) and the preferred‑depositary‑share dividend ($0.50) are taxable cash dividends.
  
• Because Jackson Financial is a Business Development Company (BDC), the dividends are generally taxed as ordinary (non‑qualified) dividend income at the investor’s ordinary marginal tax rate.
  
• There is no substantive tax distinction between holding the common shares and the preferred depositary shares for the 2025 dividend; the same reporting forms, the same tax rates, and the same withholding rules apply.
  
• The only way the tax outcome could differ is if the investor’s overall tax situation (e.g., filing status, state of residence, use of a tax‑advantaged account, or foreign‑person status) changes between the two holdings.
  

Therefore, investors should treat the 2025 Jackson dividend on either class of shares as ordinary dividend income, report it on Form 1040 (Schedule B) via the 1099‑DIV, and apply their personal marginal tax rate (plus any applicable state tax).