Such income is taxed once at the corporate rate of 35% and again when it is passed through to the individual as a capital gain or dividend at 15%, for a highest marginal tax rate of about 44.75%.

WSJ: Review & Outlook: The Buffett Ruse

Raising your personal income tax rate on dividend and capital gain income to 30 percent increases your effective tax rate to 45.3 percent.

FORBES: The Arbitrariness of the Buffett Rule

So if trust income is a mixture of dividend, capital gain and tax-free income (from muni bonds or principal), the ordinary income must be used up before the payout can be taxed as gain, and gain must be used before the payout can be tax-free.

FORBES: The new giving game

You don't want to sell just to pick up a point or two on a potential repurchase at a lower level , since this has capital gain consequences and could make your dividend payments ineligible for the 15% tax rate.

FORBES: Magazine Article