Investors have had some reason to celebrate of late -- not only did Congress dramatically reduce the tax on dividends individuals receive, it also lowered the tax on long-term capital gains. Both are now subject to a 15% tax.But nothing about tax law is ever that simple, and the new rules have spawned several reader questions on a few topics. So, in the interest of clarity, let's target a few areas of common misconception. Short-term capital gains. Much of the press surrounding this tax law has said that the tax on capital gains has been cut. That's only half true -- long-term rates have been cut from 20% to 15%. Only securities sold more than a year after you bought them will qualify for this rate, though. Short-term capital gains rates remain the same. That means that the profits on any securities sold a year or less from the time they were purchased will be taxed according to your ordinary income tax rate. Also, the super-long-term rate on capital gains has been eliminated. Prior to the new law, any securities purchased after Dec. 31, 2000, and held for more than five years were to be eligible for an 18% rate. The new law doesn't provide any additional incentive for holding stocks, bonds or funds for anything longer than a year. Real estate investment trusts (REITs). By definition, REITs do not pay corporate tax on their profits, and they must pass on 95% of their earnings to investors as dividends. Because of this structure, though, REIT investors will not be eligible for the 15% tax rate on REIT dividends -- rather, the rate will continue to be their ordinary income tax rate. There are a few exceptions, though. If the REIT does pay tax on all or part of its profits, its dividend (or a pro-rated portion of it) will be eligible for the 15% rate once it's distributed to investors. Also, if the REIT has taxable subsidiaries that contribute to the dividend payout, that portion will be eligible for the 15% rate as well. And if any part of the REIT dividend is attributable to capital gains the REIT incurred, that portion will be eligible for the 15% tax. These exceptions are pretty rare, though, and most REIT investors can assume that the entirety of their REIT dividend payout will be taxed at their ordinary income tax rate.