What are the tax considerations for shareholders receiving this quarterly dividend?

Tax considerations for shareholders who receive Permian Resources’ (PMR) quarterly cash dividend

Below is a detailed, step‑by‑step guide to the main tax issues you should keep in mind when you receive a cash dividend from Permian Resources. While the press release does not disclose the dividend amount or the company’s tax status, the principles below apply to any ordinary cash dividend paid by a U.S.‑based corporation and can be adapted once the specific details are known.

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1. How the dividend is classified for tax purposes

Classification	Typical tax treatment	Key requirements
Qualified dividend	Taxed at the “qualified dividend” rates (0%, 10%, 15%, 20% or 37% depending on your ordinary income tax bracket).	• The dividend must be paid by a U.S. corporation (Permian Resources is a U.S. company). • You must hold the shares for the required holding period – generally more than 60 days during the 121‑day period that begins 60 days before the ex‑dividend date. • The dividend must not be from a “non‑qualified” source (e.g., certain REITs, MLPs, or foreign corporations that don’t meet the “qualified” tests).
Non‑qualified (ordinary) dividend	Taxed as ordinary “dividend income” at your regular marginal tax rate (the same rate you pay on wages, interest, etc.).	• If you do not meet the holding‑period rule, or the dividend is from a non‑qualified source, it falls into this bucket.

Bottom line: Most cash dividends from a typical U.S. operating company like Permian Resources are qualified if you hold the shares long enough. Until the exact dividend amount and any special tax status are disclosed, assume the dividend will be qualified, but verify the holding period.

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2. Reporting the dividend on your tax return

Form	When it’s used	What to do
Form 1099‑DIV (U.S.)	Issued by the broker or the company to shareholders who receive $10 or more in dividends during the year.	• The form shows Box 1a – “Ordinary dividends” (total of qualified + non‑qualified). • Box 1b – “Qualified dividends” (the portion that qualifies for the lower rates). • Enter the amounts on Schedule B (Form 1040) if your total ordinary dividends exceed $200, then transfer the totals to Form 1040, line 3b (qualified) and line 3a (ordinary).
Form 1042‑S (for non‑U.S. persons)	If you are a foreign shareholder, the payer may withhold 30% (or a reduced treaty rate) on the dividend and issue this form.	• The withheld tax is a final tax unless you file a U.S. return to claim a refund.
State tax forms	Most states tax dividend income the same way the federal government does.	• Include the dividend on your state return; check for any state‑specific exemptions or credits.

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3. Federal income‑tax rates that apply

Taxable dividend type	2025 marginal tax brackets (single)	Qualified‑dividend rates
Ordinary (non‑qualified)	10% up to $11,000; 12% up to $44,725; 22% up to $95,375; 24% up to $182,100; 32% up to $231,250; 35% up to $578,125; 37% over $578,125	Qualified dividend rates: 0% (if in 10% or 12% bracket), 10% (if in 22% bracket), 15% (if in 24% bracket), 20% (if in 32% or 35% bracket), 37% (if in 37% bracket).
Married filing jointly	Same structure, but thresholds are doubled.	Same qualified‑dividend rates.

Practical tip: If you are in the 22% marginal bracket, qualified dividends are taxed at 10%—a significant reduction versus ordinary dividend tax at 22%.

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4. Additional federal considerations

Issue	What you need to know
Net Investment Income Tax (NIIT)	If your modified adjusted gross income (MAGI) exceeds $200,000 (single) or $250,000 (married filing jointly), a 3.8% NIIT applies to the lesser of your net investment income or the amount by which MAGI exceeds the threshold. Qualified dividends count toward net investment income.
Alternative Minimum Tax (AMT)	Qualified dividends are not a “preference item” for AMT, but ordinary dividend income is included in the AMT calculation.
Holding‑period rule	Failure to meet the 60‑day holding period (or 61‑day for “deep‑discount” preferred stock) converts a qualified dividend to ordinary.
Dividend reinvestment plans (DRIPs)	If you elect to reinvest the cash dividend, the reinvested amount is still taxable in the year received. The reinvested shares become part of your cost basis, which will affect capital‑gain calculations when you eventually sell.
Section 301 distributions	A cash dividend is a Section 301 distribution. It does not reduce your basis in the stock; you still own the same number of shares after the dividend is paid.

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5. State and local tax implications

State	Typical treatment	Notes
Most states (e.g., CA, NY, TX)	Tax dividend as ordinary income, using the same federal classification (qualified vs non‑qualified).	• Some states (e.g., Illinois) do not have a separate “qualified dividend” rate; they tax the dividend at the regular state income‑tax rate.
States with no income tax (e.g., FL, TX, WA, AK, ND, NH, SC)	No state tax on dividend income.	• Even if your state has no income tax, you still owe federal tax.
Local (city) taxes	A few municipalities impose a local income tax (e.g., New York City).	• Apply the same reporting as on the state return.

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6. International (non‑U.S.) shareholders

Consideration	Typical outcome
U.S. withholding	Unless a tax treaty reduces the rate, the default 30% withholding on cash dividends is applied. The payer (broker or the company) will issue Form 1042‑S to you.
Foreign‑tax credit	You may be able to claim a foreign‑tax credit on your home‑country return for the U.S. tax withheld, reducing double‑taxation.
Reporting	Even if you do not file a U.S. return, you must still report the dividend in your home jurisdiction (often as foreign‑source income).

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7. Impact on your cost basis and future capital‑gains

• Cash dividend does not change the number of shares you own – you still hold the same share count after the dividend is paid.
  
• If you reinvest the dividend (via a DRIP or by buying more shares with the cash), the purchase price of the new shares becomes part of your cost basis. When you eventually sell any shares, the adjusted cost basis will be used to calculate capital gains or losses.
  
• If you hold the shares for more than one year after the dividend date, any subsequent sale will be a long‑term capital gain (taxed at 0%, 15%, or 20% for most taxpayers).
  

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8. Practical steps you should take now

1. Confirm the dividend amount and the ex‑dividend date (the press release will be followed by a detailed filing with the SEC that includes the exact cash amount per share).
   
2. Check your holding period – make sure you have owned the shares for at least 60 days in the 121‑day window surrounding the ex‑dividend date.
   
3. Monitor your brokerage statements for the Form 1099‑DIV (or the equivalent foreign‑tax statement) that will be issued early in the next calendar year (typically by late January).
   
4. Plan for the tax impact:
   
   • If you are in a high marginal bracket, a qualified dividend may still be taxed at 15%–20% (or 0% if you’re in the 10%/12% bracket).
     
   • If you are subject to the NIIT, add the 3.8% tax on the dividend portion that exceeds the NIIT threshold.
     
5. Consider a tax‑loss harvesting strategy if you anticipate a large dividend and want to offset it with capital‑losses realized earlier in the year.
   
6. If you are a non‑U.S. investor, verify the applicable treaty rate and ensure the correct amount of withholding is applied; keep the 1042‑S for your foreign‑tax return.
   

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9. Summary checklist for shareholders

Item	What to verify / do
Dividend classification	Confirm if the dividend will be qualified (hold shares ≥60 days).
Federal tax rate	Determine your marginal tax bracket → apply qualified‑dividend rate (0%‑20%); otherwise ordinary rate.
NIIT	Check if MAGI > $200k (single) / $250k (MFJ) → 3.8% NIIT may apply.
State tax	Review your state’s treatment of dividend income.
Reporting	Anticipate receiving Form 1099‑DIV (or 1042‑S) and report on Schedule B/Form 1040.
Withholding for foreign investors	Ensure correct treaty rate; keep 1042‑S for foreign filing.
Holding period	Verify you meet the 60‑day rule; otherwise dividend becomes ordinary.
Reinvestment	If you reinvest, track new share purchases for future cost‑basis calculations.
Tax planning	Consider NIIT, AMT, and potential tax‑loss harvesting to offset the dividend.

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Bottom line

• Most likely: The cash dividend from Permian Resources will be a qualified dividend (subject to the lower qualified‑dividend tax rates) if you meet the 60‑day holding‑period rule.
  
• Taxable at the federal level: You’ll report it on Form 1040 (Schedule B) and pay either the qualified‑dividend rate or your ordinary marginal rate, depending on the classification.
  
• Additional layers: NIIT, state tax, and possible foreign withholding may increase the overall tax burden.
  
• Action required: Keep track of the exact dividend amount, your holding period, and the 1099‑DIV you’ll receive; then incorporate the dividend into your annual tax planning to avoid surprises.
  

By following the steps above, you’ll be prepared to correctly report the dividend, minimize any unexpected tax liability, and integrate the dividend into your broader investment‑tax strategy.