Title 26 — Internal Revenue Code
Part I · Chapter 1 — Normal Taxes and Surtaxes
§ 316. Dividend defined
Statutory text
General rule
For purposes of this subtitle, the term “dividend” means any distribution of property made by a corporation to its shareholders—
out of its earnings and profits accumulated after , or
out of its earnings and profits of the taxable year (computed as of the close of the taxable year without diminution by reason of any distributions made during the taxable year), without regard to the amount of the earnings and profits at the time the distribution was made.
Except as otherwise provided in this subtitle, every distribution is made out of earnings and profits to the extent thereof, and from the most recently accumulated earnings and profits. To the extent that any distribution is, under any provision of this subchapter, treated as a distribution of property to which section 301 applies, such distribution shall be treated as a distribution of property for purposes of this subsection.
Special rules
Certain insurance company dividends
The definition in subsection (a) shall not apply to the term “dividend” as used in subchapter L in any case where the reference is to dividends of insurance companies paid to policyholders as such.
Distributions by personal holding companies
In the case of a corporation which—
under the law applicable to the taxable year in which the distribution is made, is a personal holding company (as defined in section 542), or
for the taxable year in respect of which the distribution is made under section 563(b) (relating to dividends paid after the close of the taxable year), or section 547 (relating to deficiency dividends), or the corresponding provisions of prior law, is a personal holding company under the law applicable to such taxable year,
the term “dividend” also means any distribution of property (whether or not a dividend as defined in subsection (a)) made by the corporation to its shareholders, to the extent of its undistributed personal holding company income (determined under section 545 without regard to distributions under this paragraph) for such year.
For purposes of subparagraph (A), the term “distribution of property” includes a distribution in complete liquidation occurring within 24 months after the adoption of a plan of liquidation, but—
only to the extent of the amounts distributed to distributees other than corporate shareholders, and
only to the extent that the corporation designates such amounts as a dividend distribution and duly notifies such distributees of such designation, under regulations prescribed by the Secretary, but
not in excess of the sum of such distributees’ allocable share of the undistributed personal holding company income for such year, computed without regard to this subparagraph or section 562(b).
Deficiency dividend distributions by a regulated investment company or real estate investment trust
The term “dividend” also means any distribution of property (whether or not a dividend as defined in subsection (a)) which constitutes a “deficiency dividend” as defined in section 860(f).
Certain distributions by regulated investment companies in excess of earnings and profits
In the case of a regulated investment company that has a taxable year other than a calendar year, if the distributions by the company with respect to any class of stock of such company for the taxable year exceed the company’s current and accumulated earnings and profits which may be used for the payment of dividends on such class of stock, the company’s current earnings and profits shall, for purposes of subsection (a), be allocated first to distributions with respect to such class of stock made during the portion of the taxable year which precedes January 1.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Aug. 16, 1954, ch. 736, 68A Stat. 98 · 68A Stat. 98
Enacted · 26 U.S.C. § 316
Aug. 16, 1954, ch. 736, 68A Stat. 98
Source evidence
Code source credit
Aug. 16, 1954, ch. 736, 68A Stat. 98Public Law not identified
Substituted · 26 U.S.C. § 316(b)(1)
Subsec. (b)(1). Act Mar. 13, 1956, substituted “subchapter L” for “sections 803(e), 821(a)(2), and 832(c)(11)”
Unresolved: No Public Law or Statutes at Large citation in the Code source.
Source evidence
Code amendment note
Subsec. (b)(1). Act Mar. 13, 1956, substituted “subchapter L” for “sections 803(e), 821(a)(2), and 832(c)(11)”.Revenue Act of 1964
Pub. L. 88–272 title II § 225(f)(1) · 78 Stat. 19
Inserted · 26 U.S.C. § 316(b)(2)
Pub. L. 88–272 inserted definition of “distribution of property”
Source evidence
Code amendment note
Subsec. (b)(2). Pub. L. 88–272 inserted definition of “distribution of property”.Enacted provision · exact public law section
(1) Paragraph (2) of section 316(b) (relating to special rules 26 USC 316. for dividend defined) is amended to read as follows: “(2) Distributions by personal holding companies.— “(A) In the case of a corporation which— “(i) under the law applicable to the taxable year in which the distribution is made, is a personal holding company (as defined in section 542), or Ante, p. 79. 26 USC 542. “(ii) for the taxable year in respect of which the distribution is made under section 563(b) (relating to 26 USC 563. dividends paid after the close of the taxable year), or section 547 (relating to deficiency dividends), or the cor- 26 USC 547. responding provisions of prior law, is a personal holding company under the law applicable to such taxable year, the term ‘dividend’ also means any distribution of property (whether or not a dividend as defined in subsection (a)) made by the corporation to its shareholders, to the extent of its undistributed personal holding company income (determined 68A Stat. 189. 26 USC 545. under section 545 without regard to distributions under this paragraph) for such year. “(B) For purposes of subparagraph (A), the term ‘distribution of property’ includes a distribution in complete liquidation occurring within 24 months after the adoption of a plan of liquidation, but— “(i) only to the extent of the amounts distributed to distributees other than corporate shareholders, and “(ii) only to the extent that the corporation designates such amounts as a dividend distribution and duly notifies such distributees of such designation, under regulations prescribed by the Secretary or his delegate, but “(iii) not in excess of the sum of such distributees’ allocable share of the undistributed personal holding company income for such year, computed without regard Infra. 26 USC 331. to this subparagraph or section 562(b).”Pub. L. 94–455 § 1906(b)(13)(A) · 90 Stat. 1520
Struck · 26 U.S.C. § 316(b)(2)(B)(ii)
Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”
Source evidence
Code amendment note
Subsec. (b)(2)(B)(ii). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.Enacted provision · exact public law section
(A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.Pub. L. 94–455 § 1601(d) · 90 Stat. 1520
Added · 26 U.S.C. § 316(b)(3)
Pub. L. 94–455, § 1601(d), added par. (3)
Source evidence
Code amendment note
Subsec. (b)(3). Pub. L. 94–455, § 1601(d), added par. (3).Enacted provision · exact public law section
(d) Definition of Dividend.— Subsection (b) of section 316 (relating to the definition of dividend) is amended by adding a new paragraph (3) at the end thereof, to read as follows: “(3) Deficiency dividend distributions by a real estate investment trust.— The term ‘dividend’ also means any distribution of property (whether or not a dividend as defined in subsection (a)) which constitutes a ‘deficiency dividend’ as defined in section 859(d).”Pub. L. 95–600 title III § 362(d)(1) · 92 Stat. 2763
Inserted · 26 U.S.C. § 316(b)(3)
Pub. L. 95–600 inserted “regulated investment company or” after “distributions by a” in heading
Substituted · 26 U.S.C. § 316(b)(3)
Pub. L. 95–600 substituted in text “section 860(f)” for “section 859(d)”
Source evidence
Code amendment note
Subsec. (b)(3). Pub. L. 95–600 inserted “regulated investment company or” after “distributions by a” in heading and substituted in text “section 860(f)” for “section 859(d)”.Enacted provision · exact public law section
(1) Paragraph (3) of section 316(b) (relating to deficiency 26 USC 316. dividend distributions by a real estate investment trust) is amended— (A) by striking out “section 859(d)” and inserting in lieu thereof “section 860(f)”, and (B) by striking out “real estate investment trust” in the paragraph heading and inserting in lieu thereof “regulated investment company or real estate investment trust”.Regulated Investment Company Modernization Act of 2010
Pub. L. 111–325 title III § 305(a) · 124 Stat. 3537
Added · 26 U.S.C. § 316(b)(4)
Pub. L. 111–325 added par. (4)
Source evidence
Code amendment note
Subsec. (b)(4). Pub. L. 111–325 added par. (4).Enacted provision · exact public law section
(a) In General.— Subsection (b) of section 316 is amended by adding at the end the following new paragraph: “(4) Certain distributions by regulated investment companies in excess of earnings and profits.— In the case of a regulated investment company that has a taxable year other than a calendar year, if the distributions by the company with respect to any class of stock of such company for the taxable year exceed the company’s current and accumulated earnings and profits which may be used for the payment of dividends on such class of stock, the company’s current earnings and profits shall, for purposes of subsection (a), be allocated first to distributions with respect to such class of stock made during the portion of the taxable year which precedes January 1.” .Effective date note
Pub. L. 111–325, title III, § 305(b), Dec. 22, 2010, 124 Stat. 3549, provided that: “The amendment made by this section [amending this section] shall apply to distributions made in taxable years beginning after the date of the enactment of this Act [Dec. 22, 2010].”
6 of 8 references resolved to an enrolled provision · 1 partial · 1 unresolved
Editorial Notes
Amendments1956–2010 · 5 rounds
2010
Subsec. (b)(4). Pub. L. 111–325 added par. (4).
1978
Subsec. (b)(3). Pub. L. 95–600 inserted “regulated investment company or” after “distributions by a” in heading and substituted in text “section 860(f)” for “section 859(d)”.
1976
Subsec. (b)(2)(B)(ii). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Subsec. (b)(3). Pub. L. 94–455, § 1601(d), added par. (3).
1964
Subsec. (b)(2). Pub. L. 88–272 inserted definition of “distribution of property”.
1956
Subsec. (b)(1). Act , substituted “subchapter L” for “sections 803(e), 821(a)(2), and 832(c)(11)”.
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Pub. L. 111–325, title III, § 305(b), , 124 Stat. 3549, provided that: “The amendment made by this section [amending this section] shall apply to distributions made in taxable years beginning after the date of the enactment of this Act [].”
Effective Date of 1978 Amendment
Amendment by Pub. L. 95–600 applicable with respect to determinations (as defined in section 860(e) of this title) after , see section 362(e) of Pub. L. 95–600, set out as an Effective Date note under section 860 of this title.
Effective Date of 1976 Amendment
For effective date of amendment by section 1601(d) of Pub. L. 94–455, see section 1608(a) of Pub. L. 94–455, set out as a note under section 857 of this title.
Effective Date of 1964 Amendment
Pub. L. 88–272, title II, § 225(l), , 78 Stat. 94, provided that:
“(1) The amendments made by this section [enacting section 1022, redesignating former section 1022 as 1023, amending this section and sections 331, 333, 381, 541, 542, 543, 544, 545, 551, 553, 554, 562, 856, 1016, 1361, 6501, and the analysis preceding section 1011, and enacting provisions set out as a note under section 333 of this title] (other than by subsections (c)(1), (f), (g), and (j) [enacting section 1022, redesignating former section 1022 as 1023, amending this section and sections 331, 333, 542, 551, 562, 1016, and the analysis preceding section 1011 of this title]) shall apply to taxable years beginning after .
“(2) The amendment made by subsection (c)(1) [amending section 542 of this title] shall apply to taxable years beginning after .
“(3) The amendments made by subsections (f) and (g) [amending this section and sections 331, 333, 551, and 562 of this title] shall apply to distributions made in any taxable year of the distributing corporation beginning after .
“(4) The amendments made by subsection (j) [enacting section 1022, redesignating former section 1022 as 1023, and amending section 1016 and the analysis preceding section 1011 of this title] shall apply in respect of decedents dying after .
“(5) Subsection (h) [set out as a note under section 333 of this title] shall apply to taxable years beginning after .”
Effective Date of 1956 Amendment
Act Mar. 13, 1956, ch. 83, § 6, 70 Stat. 49, provided that: “The amendments made by this Act [amending this section and sections 501, 594, 801 to 805, 811 to 813, 816 to 818, 821, 822, 832, 841, 842, 843, 891, 1201, 1504, and 4371 of this title] shall apply only to taxable years beginning after .”
Credits
1954–2010 · 6 acts
- 1954Aug. 16, 1954, ch. 736, 68A Stat. 98
- 1956Mar. 13, 1956, ch. 83, § 5(1), 70 Stat. 49
- 1964Pub. L. 88–272, title II, § 225(f)(1), , 78 Stat. 87
- 1976Pub. L. 94–455, title XVI, § 1601(d), title XIX, § 1906(b)(13)(A), , 90 Stat. 1746, 1834
- 1978Pub. L. 95–600, title III, § 362(d)(1), , 92 Stat. 2851
- 2010Pub. L. 111–325, title III, § 305(a), , 124 Stat. 3549.
Show as published
(Aug. 16, 1954, ch. 736, 68A Stat. 98; Mar. 13, 1956, ch. 83, § 5(1), 70 Stat. 49; Pub. L. 88–272, title II, § 225(f)(1), , 78 Stat. 87; Pub. L. 94–455, title XVI, § 1601(d), title XIX, § 1906(b)(13)(A), , 90 Stat. 1746, 1834; Pub. L. 95–600, title III, § 362(d)(1), , 92 Stat. 2851; Pub. L. 111–325, title III, § 305(a), , 124 Stat. 3549.)