Treasury Regulations · 26 CFR

§ 1.1502-26. Consolidated dividends received deduction.

In effect eCFR current as of October 15, 2026

Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).

Regulation under 26 U.S.C. § 1502

Cite as 26 CFR § 1.1502-26

At a glance

Read from the text and its source citation. Not part of the regulation.

Status: In the current eCFR
Issued: September 8, 1966 by T.D. 6894
Last amended: December 30, 2024 by T.D. 10018
Issued under: 26 U.S.C. § 1502
Length: 446 words · about 2 min to read
Cross-references: cites 3 Code sections and 1 regulation; cited by 4

¶(a) In general. The consolidated dividends received deduction for the taxable year is the lesser of—

¶(1) The aggregate of the deduction of the members of the group allowable under sections 243(a)(1), 245(a) and (b), and 250 (computed without regard to the limitations provided in section 246(b)), or

¶(2) The aggregate amount described in section 246(b), determined by substituting, wherever it appears—

¶(i) The term consolidated taxable income for taxable income,

¶(ii) The term consolidated net operating loss for net operating loss, and

¶(iii) The term consolidated net capital loss for capital loss.

¶(b) Intercompany dividends. The deduction determined under paragraph (a) of this section is determined without taking into account intercompany dividends to the extent that, under § 1.1502-13(f)(2), they are not included in gross income. See § 1.1502-13 for additional rules relating to intercompany dividends.

¶(c) Examples. The provisions of this section may be illustrated by the following examples:

¶(1) Example 1.

¶(i) Corporations P, S, and S-1 filed a consolidated return for the calendar year 2023 showing consolidated taxable income of $100,000 (determined without regard to the consolidated net operating loss deduction, and the consolidated dividends received deduction). These corporations received dividends during such year from less than 20-percent owned domestic corporations as follows:

Table 1 to Paragraph **(c)(1)(i)**
Corporation	Dividends
P	$6,000
S	10,000
S-1	34,000
Total	50,000

¶(ii) The dividends received deduction allowable to each member under section 243(a)(1) (computed without regard to the limitation in section 246(b)) is as follows: P has $3,000 (50 percent of $6,000), S has $5,000 (50 percent of $10,000), and S-1 has $17,000 (50 percent of $34,000), or a total of $25,000. Since $25,000 is less than $50,000 (50 percent of $100,000), the consolidated dividends received deduction is $25,000.

¶(2) Example 2. Assume the same facts as in paragraph (c)(1)(i) of this section (Example 1), except that consolidated taxable income (computed without regard to the consolidated net operating loss deduction and the consolidated dividends received deduction) was $40,000. The aggregate of the dividends received deductions, $42,500, computed without regard to section 246(b), results in a consolidated net operating loss of $2,500. See section 172(d)(5). Therefore, paragraph (a)(2) of this section does not apply and the consolidated dividends received deduction is $42,500.

[T.D. 6894, 31 FR 11794, Sept. 8, 1966, as amended by T.D. 7631, 44 FR 40497, July 11, 1979; T.D. 8597, 60 FR 36710, July 18, 1995; T.D. 8677, 61 FR 33323, June 27, 1996; T.D. 8823, 64 FR 36099, July 2, 1999; T.D. 10018, 89 FR 106868, Dec. 30, 2024]

Cross-references

Computed from the citations in the text of 26 CFR.

Code sections it cites

Regulations it cites

§ 1.1502-13 Intercompany transactions.

Cited by 4 other regulations

Amendment history

From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.

December 30, 2024Amended by T.D. 10018 (89 FR 106868)
July 2, 1999Amended by T.D. 8823 (64 FR 36099)
June 27, 1996Amended by T.D. 8677 (61 FR 33323)
July 18, 1995Amended by T.D. 8597 (60 FR 36710)
July 11, 1979Amended by T.D. 7631 (44 FR 40497)
September 8, 1966Issued by T.D. 6894 (31 FR 11794)

Where it sits in 26 CFR

Nearby sections

§ 1.1502-21 Net operating losses.
§ 1.1502-22 Consolidated capital gain and loss.
§ 1.1502-23 Consolidated net section 1231 gain or loss.
§ 1.1502-24 Consolidated charitable contributions deduction.
§ 1.1502-26 Consolidated dividends received deduction.
§ 1.1502-28 Consolidated section 108.