§563 — Title 26 Internal Revenue Code | U.S. Code

Summary

Treat dividends paid after a tax year but by the 15th day of the fourth month after it ends as if they were paid during that tax year for the accumulated earnings tax. For the personal holding company tax, a company can choose on its return to treat such dividends the same way, but the amount allowed cannot exceed either the company’s undistributed personal holding company income for that year (computed without using this rule) or 20 percent of the dividends paid that year (computed without using this rule). For timing rules that count when distributions are made, a distribution paid in that period is treated as made on the last day of the tax year.

Title 26, §563

Internal Revenue Code — Source: USLM XML via OLRC

(a)In the determination of the dividends paid deduction for purposes of the accumulated earnings tax imposed by section 531, a dividend paid after the close of any taxable year and on or before the 15th day of the fourth month following the close of such taxable year shall be considered as paid during such taxable year.

(b)In the determination of the dividends paid deduction for purposes of the personal holding company tax imposed by section 541, a dividend paid after the close of any taxable year and on or before the 15th day of the fourth month following the close of such taxable year shall, to the extent the taxpayer elects in its return for the taxable year, be considered as paid during such taxable year. The amount allowed as a dividend by reason of the application of this subsection with respect to any taxable year shall not exceed either—

(1)The undistributed personal holding company income of the corporation for the taxable year, computed without regard to this subsection, or

(2)20 percent of the sum of the dividends paid during the taxable year, computed without regard to this subsection.

(c)For the purpose of applying section 562(a), with respect to distributions under subsection (a) or (b) of this section, a distribution made after the close of a taxable year and on or before the 15th day of the fourth month following the close of the taxable year shall be considered as made on the last day of such taxable year.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2015—Pub. L. 114–41 substituted “fourth month” for “third month” wherever appearing. 2004—Subsecs. (c), (d). Pub. L. 108–357 redesignated subsec. (d) as (c), substituted “subsection (a) or (b)” for “subsection (a), (b), or (c)”, and struck out former subsec. (c) which related to foreign personal holding company tax. 1989—Subsec. (c). Pub. L. 101–239, § 7401(b)(1), added subsec. (c). Former subsec. (c) redesignated (d). Subsec. (d). Pub. L. 101–239, § 7401(b)(2), substituted “subsection (a), (b), or (c)” for “subsection (a) or (b)”. Pub. L. 101–239, § 7401(b)(1), redesignated former subsec. (c) as (d). 1969—Subsec. (b)(2). Pub. L. 91–172 substituted “20 percent” for “10 percent”.

Statutory Notes and Related Subsidiaries

Effective Date

of 2015 AmendmentAmendment by Pub. L. 114–41 applicable to returns for taxable years beginning after Dec. 31, 2015, with special rule for certain C corporations, see section 2006(a)(3) of Pub. L. 114–41, set out as a note under section 170 of this title.

Effective Date

of 2004 AmendmentAmendment by Pub. L. 108–357 applicable to taxable years of foreign corporations beginning after Dec. 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end, see section 413(d)(1) of Pub. L. 108–357, set out as an Effective and Termination Dates of 2004

Amendments

note under section 1 of this title.

Effective Date

of 1989 AmendmentAmendment by Pub. L. 101–239 applicable to taxable years of foreign corporations beginning after July 10, 1989, with special rules for any foreign corporation required by the

Amendments

made by section 7401 of Pub. L. 101–239 to change its taxable year for its first taxable year beginning after July 10, 1989, see section 7401(d) of Pub. L. 101–239, set out as an

Effective Date

note under section 898 of this title.

Effective Date

of 1969 Amendment Pub. L. 91–172, title IX, § 914(b), Dec. 30, 1969, 83 Stat. 723, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1969.”

§563 Rules Relating to Dividends Paid After Close of Taxable Year

Summary

Title 26, §563

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

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Amendments

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Amendments

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