The following are true about taxation on stocks:

1. Earnings by REITS are taxed at both the corporate level and at the taxpayer level.

2. Short-term capital gains and all dividends are always taxed at the same rate.

3. Increases in the market value of a stock over purchase price generate capital gains when the stock is sold.

4. Because capital gains are not taxed, most investors discourage the distribution of dividends.