§563. Rules relating to dividends paid after close of taxable year

(a) Accumulated earnings tax

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 third month following the close of such taxable year shall be considered as paid during such taxable year.

(b) Personal holding company tax

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 third 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) Foreign personal holding company tax

(1) In general

In the determination of the dividends paid deduction for purposes of part III, a dividend paid after the close of any taxable year and on or before the 15th day of the 3rd month following the close of such taxable year shall, to the extent the company designates such dividend as being taken into account under this subsection, be considered as paid during such taxable year. The amount allowed as a deduction by reason of the application of this subsection with respect to any taxable year shall not exceed the undistributed foreign personal holding company income of the corporation for the taxable year computed without regard to this subsection.

(2) Special rules

In the case of any distribution referred to in paragraph (1)-

(A) paragraph (1) shall apply only if such distribution is to the person who was the shareholder of record (as of the last day of the taxable year of the foreign personal holding company) with respect to the stock for which such distribution is made,

(B) the determination of the person required to include such distribution in gross income shall be made under the principles of section 551(f), and

(C) any person required to include such distribution in gross or distributable net income shall include such distribution in income for such person's taxable year in which the taxable year of the foreign personal holding company ends.

(d) Dividends considered as paid on last day of taxable year

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

(Aug. 16, 1954, ch. 736, 68A Stat. 199 ; Dec. 30, 1969, Pub. L. 91–172, title IX, §914(a), 83 Stat. 723 ; Dec. 19, 1989, Pub. L. 101–239, title VII, §7401(b), 103 Stat. 2356 .)

Amendments

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".

Effective Date of 1989 Amendment

Amendment 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

Section 914(b) of Pub. L. 91–172 provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1969."

Cross References

Accumulated earnings credit reduced under certain circumstances by dividends paid after close of taxable year but considered as paid during taxable year, see section 535 of this title.

Deficiency dividend deduction of personal holding companies, see section 547 of this title. Personal holding company dividend defined, see section 316 of this title.

Section Referred to in Other Sections

This section is referred to in sections 316, 535, 543, 547, 561 of this title.