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Title 26 — Internal Revenue CodeRelease 119-73not60

§561 Definition of Deduction for Dividends Paid

Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter G— Corporations Used to Avoid Income Tax on Shareholders › Part IV— DEDUCTION FOR DIVIDENDS PAID › § 561

Last updated Apr 5, 2026|Official source

Summary

Add up three amounts to get a company's deduction for dividends. Include dividends actually paid during the taxable year, any consent dividends figured under section 565, and—only for a personal holding company—any dividend carryover from section 564. Also follow the rules in section 562 about which dividends count and section 563 for dividends paid after the year ends.

Full Legal Text

Title 26, §561

Internal Revenue Code — Source: USLM XML via OLRC

(a)The deduction for dividends paid shall be the sum of—
(1)the dividends paid during the taxable year,
(2)the consent dividends for the taxable year (determined under section 565), and
(3)in the case of a personal holding company, the dividend carryover described in section 564.
(b)In determining the deduction for dividends paid, the rules provided in section 562 (relating to rules applicable in determining dividends eligible for dividends paid deduction) and section 563 (relating to dividends paid after the close of the taxable year) shall be applicable.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

1976—Subsec. (b). Pub. L. 94–455 redesignated existing provisions of par. (1) as subsec. (b) and struck out par. (2) relating to special adjustment on disposition of antitrust stock as a dividend. 1962—Subsec. (b). Pub. L. 87–403 designated existing provisions as par. (1) and added par. (2).

Statutory Notes and Related Subsidiaries

Effective Date

of 1976 AmendmentAmendment by Pub. L. 94–455 applicable with respect to 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.

Effective Date

of 1962 AmendmentAmendment by Pub. L. 87–403 applicable only with respect to distributions made after Feb. 2, 1962, see section 3(g) of Pub. L. 87–403, set out as a note under section 312 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 561

Title 26 — Internal Revenue Code

Last Updated

Apr 5, 2026

Release point: 119-73not60