§243 Dividends received by corporations

The Small Business Investment Act of 1958, referred to in subsec. (a)(2), is Pub. L. 85–699, Aug. 21, 1958, 72 Stat. 689, which is classified principally to chapter 14B (§ 661 et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see

note set out under section 661 of Title 15 and Tables.

2018—Subsec. (b)(1)(B). Pub. L. 115–141, § 401(d)(1)(D)(v), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “if— “(i) such dividend is distributed out of the earnings and profits of a taxable year of the distributing corporation which ends after December 31, 1963, for which an election under section 1562 was not in effect, and on each day of which the distributing corporation and the corporation receiving the dividend were members of such affiliated group, or “(ii) such dividend is paid by a corporation with respect to which an election under section 936 is in effect for the taxable year in which such dividend is paid.” Subsec. (b)(2)(A). Pub. L. 115–141, § 401(d)(1)(D)(xvii)(II), struck out “, 1504(b)(4),” after “1504(b)(2)”. 2017—Subsec. (a)(1). Pub. L. 115–97, § 13002(a)(1), substituted “50 percent” for “70 percent”. Subsec. (c). Pub. L. 115–97, § 13002(a)(3), which directed amendment of subsec. (c) heading by substituting “Increased percentage” for “Retention of 80-percent dividend received deduction”, was executed by making the substitution for “Retention of 80-percent dividends received deduction”, to reflect the probable intent of Congress. Subsec. (c)(1). Pub. L. 115–97, § 13002(a)(2), substituted “65 percent” for “80 percent” and “50 percent” for “70 percent”. 2014—Subsec. (c)(1). Pub. L. 113–295, § 221(a)(41)(C), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “In the case of any dividend received from a 20-percent owned corporation— “(A) subsection (a)(1) of this section, and “(B) subsections (a)(3) and (b)(2) of section 244, shall be applied by substituting ‘80 percent’ for ‘70 percent’.” Subsec. (d)(4). Pub. L. 113–295, § 221(a)(41)(D), struck out par. (4) which read as follows: “Any dividend received which is described in section 244 (relating to dividends received on preferred stock of a public utility) shall not be treated as a dividend.” 1996—Subsec. (b)(2). Pub. L. 104–188, § 1702(h)(8), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “For purposes of this subsection, the term ‘affiliated group’ has the meaning given such term by section 1504(a), except that for such purposes section 1504(b)(2), 1504(b)(4), and 1504(c) shall not apply.” Subsec. (b)(3)(A). Pub. L. 104–188, § 1702(h)(4), inserted “of” after “In the case”. 1990—Subsec. (b). Pub. L. 101–508 amended subsec. (b) generally, substituting present provisions for provisions defining “qualifying dividends”, providing for an election by or for an affiliated group, the effect of an election, and the termination of an election, defining an “affiliated group”, and providing special rules for insurance companies. 1988—Subsec. (b)(6). Pub. L. 100–647 substituted “section 801” for “section 801 or 821”. 1987—Subsec. (a)(1). Pub. L. 100–203, § 10221(a)(1), substituted “70 percent” for “80 percent”. Subsecs. (c) to (e). Pub. L. 100–203, § 10221(b), added subsec. (c) and redesignated former subsecs. (c) and (d) as (d) and (e), respectively. 1986—Subsec. (a)(1). Pub. L. 99–514, § 611(a)(1), substituted “80 percent” for “85 percent”. Subsec. (b)(3)(C). Pub. L. 99–514, § 411(b)(2)(C)(iv), inserted “and” at end of cl. (i), redesignated cl. (iii) as (ii), and struck out former cl. (ii) which read as follows: “$400,000 limitation for certain exploration expenditures under section 617(h)(1), and”. 1984—Subsec. (b)(3)(C). Pub. L. 98–369, § 211(b)(3)(A), inserted “and” at end of cl. (ii), struck out cl. (iii) which provided for a $25,000 limitation on small business deduction of life insurance companies under section 804(a)(3) and 809(d)(10), and redesignated cl. (iv) as (iii). Subsec. (b)(6). Pub. L. 98–369, § 211(b)(3)(B), substituted “section 801” for “section 802”. 1981—Subsec. (b)(3)(C)(i). Pub. L. 97–34 struck out “$150,000” before “minimum accumulated earnings credit”. 1976—Subsec. (a)(2). Pub. L. 94–455, § 1901(a)(34)(A), inserted “(15 U.S.C. 661 and following)” after “Small Business Investment Act of 1958”. Subsec. (b)(1). Pub. L. 94–455, § 1051(f)(1), inserted “either” at end of subpar. (A), substituted a comma for a period and inserted “or” at end of subpar. (B), and added subpar. (C). Subsec. (b)(2), (3), (4). Pub. L. 94–455, title XIX, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”. Subsec. (b)(2)(A). Pub. L. 94–455, § 1901(a)(34)(B), struck out “(except that in the case of a taxable year of a member beginning in 1963 and ending in 1964, if the election is effective for the taxable year of the common parent corporation which includes the last day of such taxable year of such member, such election shall be effective for such taxable year of such member, if such member consents to such election with respect to such taxable year)” after “with respect to which the election is made”. Subsec. (b)(3)(B). Pub. L. 94–455, § 1031(b)(2), substituted “election under section 901(a) (relating to allowance of foreign tax credit)” for “elections under section 901(a) (relating to allowance of foreign tax credit) and section 904(b)(1) (relating to election of overall limitation)”. Subsec. (b)(3)(C). Pub. L. 94–455, §§ 1901(b)(1)(J)(ii), (21)(A)(i), 1906(b)(3)(C)(ii), struck out cl. (ii) which set a $100,000 limitation for exploration expenditures under section 615 (a) and (b), redesignated former cls. (iii), (iv), and (v) as cls. (ii), (iii), and (iv), respectively, and substituted “certain exploration expenditures under section 617(h)(1)” for “exploration expenditures under section 615(c)(1) and 617(h)(1)” in cl. (ii) as so redesignated, “804(a)(3)” for “804(a)(4)” in cl. (iii) as so redesignated, and “section 6154(c)(2) and section 6655(e)(2)” for “section 6154(c)(2) and (3) and section 6655(e)(2) and (3)” in cl. (iv) as so redesignated. Subsec. (b)(5). Pub. L. 94–455, § 1051(f)(2), inserted “, 1504(b)(4),” after “section 1504(b)(2)”. 1975—Subsec. (b)(3)(C)(i). Pub. L. 94–12 substituted “$150,000” for “$100,000”. 1969—Subsec. (b)(3)(C)(iii). Pub. L. 91–172 substituted “section 615(c)(1) and 617(h)(1)” for “section 615(c)(1)”. 1968—Subsec. (b)(3)(C)(v). Pub. L. 90–364 substituted “surtax exemption, and one amount under section 6154(c)(2) and (3) and section 6655(e)(2) and (3), for purposes of estimated tax payment requirements under section 6154” for “$100,000 exemption for purposes of estimated tax filing requirements under section 6016”. 1964—Subsec. (a). Pub. L. 88–272 substituted provisions permitting a deduction for 85 percent of dividends received except that it shall be 100 percent when received by a small business investment company operating under the Small Business Investment Act of 1958, and 100 percent in case of qualifying dividends, for provisions permitting an 85 percent deduction for corporations other than one operating under the Small Business Investment Act of 1958, and for other than dividends described in section 244(1) of this title. Subsec. (b). Pub. L. 88–272 added subsec. (b) and omitted a prior subsec. (b) which allowed a 100 percent deduction of dividends received by a small business investment company operating under the Small Business Investment Act of 1958, other than dividends described in section 244(1) of this title. Subsec. (c). Pub. L. 88–272 substituted “subsection (a)” for “subsections (a) and (b)” and added par. (4). Subsec. (d). Pub. L. 88–272 substituted “subsection (a)” for “subsections (a) and (b)”. 1960—Subsec. (c)(3). Pub. L. 86–779, § 10(g), added par. (3). Subsec. (d). Pub. L. 86–779, § 3(a), added subsec. (d). 1958—Subsec. (a). Pub. L. 85–866, § 57(b)(1), inserted “(other than a small business investment company operating under the Small Business Investment Act of 1958)”. Subsecs. (b), (c). Pub. L. 85–866, § 57(b)(2), (3), added subsec. (b), redesignated former subsec. (b) as (c), and substituted “subsections (a) and (b)” for “subsection (a)”.

of 2017 Amendment Pub. L. 115–97, title I, § 13002(f), Dec. 22, 2017, 131 Stat. 2101, provided that: “The

made by this section [amending this section and section 245, 246, 246A, and 861 of this title] shall apply to taxable years beginning after December 31, 2017.”

of 2014 AmendmentAmendment by Pub. L. 113–295 not applicable to preferred stock issued before Oct. 1, 1942 (determined in the same manner as under section 247 of this title as in effect before its repeal by Pub. L. 113–295), see section 221(a)(41)(K) of Pub. L. 113–295, set out as a note under section 172 of this title. Except as otherwise provided in section 221(a) of Pub. L. 113–295, amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a

, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

of 1996 AmendmentAmendment by Pub. L. 104–188 effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) of Pub. L. 104–188, set out as a note under section 38 of this title.

of 1990 Amendment Pub. L. 101–508, title XI, § 11814(c), Nov. 5, 1990, 104 Stat. 1388–557, provided that: “(1) In general.—The

made by this section [amending this section and section 1504 of this title] shall apply to taxable years beginning after December 31, 1990. “(2) Treatment of old elections.—For purposes of section 243(b)(3) of the Internal Revenue Code of 1986 (as amended by subsection (a)), any reference to an election under such section shall be treated as including a reference to an election under section 243(b) of such Code (as in effect on the day before the date of the enactment of this Act [Nov. 5, 1990]).”

of 1988 AmendmentAmendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.

of 1987 Amendment Pub. L. 100–203, title X, § 10221(e), Dec. 22, 1987, 101 Stat. 1330–409, as amended by Pub. L. 100–647, title II, § 2004(i)(1), Nov. 10, 1988, 102 Stat. 3603, provided that: “(1) In general.—Except as provided in paragraph (2), the

made by this section [amending this section and sections 244 to 246A, 805, 854, and 861 of this title] shall apply to dividends received or accrued after December 31, 1987, in taxable years ending after such date. “(2)

relating to limitations.—The

made by subsection (c) [amending section 246 and 805 of this title] shall apply to taxable years beginning after December 31, 1987.”

of 1986 AmendmentAmendment by section 411(b)(2)(C)(iv) of Pub. L. 99–514 applicable, except as otherwise provided, to costs paid or incurred after Dec. 31, 1986, in taxable years ending after such date, see section 411(c) of Pub. L. 99–514 set out as a note under section 263 of this title. Amendment by section 611(a)(1) of Pub. L. 99–514 applicable to dividends received or accrued after Dec. 31, 1986, in taxable years ending after such date, see section 611(b) of Pub. L. 99–514, set out as a note under section 246 of this title.

of 1984 AmendmentAmendment by Pub. L. 98–369 applicable to taxable years beginning after Dec. 31, 1983, see section 215 of Pub. L. 98–369, set out as an

note under section 801 of this title.

of 1981 AmendmentAmendment by Pub. L. 97–34 applicable to taxable years beginning after Dec. 31, 1981, see section 232(c) of Pub. L. 97–34, set out as a note under section 535 of this title.

of 1976 AmendmentFor

of amendment by section 1031(b)(2) of Pub. L. 94–455, see section 1031(c) of Pub. L. 94–455, set out as a note set out under section 904 of this title. For

of amendment by section 1051(f)(1), (2) of Pub. L. 94–455, see section 1051(i) of Pub. L. 94–455, set out as a note under section 27 of this title. Amendment by section 1901(a)(34), (b)(1), (21) of Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title. For

of amendment by section 1906(b)(3)(C)(ii) of Pub. L. 94–455, see section 1906(d) of Pub. L. 94–455, set out as a note under section 6013 of this title.

of 1975 AmendmentAmendment by Pub. L. 94–12 applicable to taxable years beginning after Dec. 31, 1974, see section 305(c) of Pub. L. 94–12, set out as a note under section 535 of this title.

of 1969 Amendment Pub. L. 91–172, title V, § 504(d), Dec. 30, 1969, 83 Stat. 633, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(1) In general.—The

) that he does not desire his election under section 615(e) to be so treated.”

of 1968 Amendment Pub. L. 90–364, title I, § 103(f), June 28, 1968, 82 Stat. 264, provided that: “Except as provided by section 104 [formerly set out as notes under section 51 and 6154 of this title], the

made by this section [enacting section 6425, amending this section and section 6020, 6154, 6651, 6655, 7203, and 7701, and repealing section 6016 and 6074 of this title] shall apply with respect to taxable years beginning after December 31, 1967.”

of 1964 Amendment Pub. L. 88–272, title II, § 214(c), Feb. 26, 1964, 78 Stat. 55, provided that: “The

made by subsections (a) [amending this section] and (b) [amending section 244, 246, 804, and 809 of this title] shall apply with respect to dividends received in taxable years ending after December 31, 1963.”

of 1960 Amendment Pub. L. 86–779, § 3(c), Sept. 14, 1960, 74 Stat. 998, provided that: “The

made by subsections (a) and (b) [amending this section and section 861 of this title] shall apply to dividends received after December 31, 1959, in taxable years ending after such date.” Amendment by section 10(g) of Pub. L. 86–779 applicable with respect to taxable years of real estate investment trusts beginning after Dec. 31, 1960, see section 10(k) of Pub. L. 86–779, set out as an

note under section 856 of this title.

of 1958 Amendment Pub. L. 85–866, § 57(d), Sept. 2, 1958, 72 Stat. 1646, provided that: “The

made by this section [enacting section 1242 and 1243 and amending this section and section 165 and 246 of this title] shall apply with respect to taxable years beginning after the date of the enactment of this Act [Sept. 2, 1958].”

For provisions that nothing in amendment by Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title. For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title.