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Dolby Labs paying special dividend of $4 per share

The Associated Press

NEW YORK (AP) -- Dolby Laboratories Inc. said Tuesday that its board authorized payment of a $4 per share special dividend ahead of potential changes in dividend tax rates.

The San Francisco maker of audio equipment will pay the dividend Dec. 27 to shareholders of record Dec.21.

Based on the company's shares outstanding, Dolby will pay out about $408 million in total.

Dolby joins a growing number of companies moving up regular payouts or issuing special end-of year dividends to protect investors from potentially having to pay higher taxes on dividend income starting in January.

Since 2003 investors have paid a maximum 15 percent on dividend income. That historically low rate will expire in January unless Congress and President Barack Obama reach a compromise on taxes and government spending. As it stands, dividends will be taxed as ordinary income in 2013, the same as wages, so rates will go up depending on which income bracket a taxpayer is in. For the highest earners, the dividend rate would jump to 43.4 percent.

Shares of Dolby Laboratories fell 6 cents to close at $34.19. In after-hours trading they rose $1.76, or 5.2 percent, to $35.95. The stock has traded between $30.16 and $45.83 over the past year.