Internal Revenue Code · 26 U.S.C.
§ 547. Deduction for deficiency dividends
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 547
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- October 4, 1976 by Pub. L. 94–455
- Length
- 7 subsections · 876 words · about 4 min to read
- Defines
- 2 terms
- Cross-references
- cites 5; cited by 5 Code sections and 3 other regulations
- Regulations
- 7 issued under this section
If a determination (as defined in subsection (c)) with respect to a taxpayer establishes liability for personal holding company tax imposed by section 541 (or by a corresponding provision of a prior income tax law) for any taxable year, a deduction shall be allowed to the taxpayer for the amount of deficiency dividends (as defined in subsection (d)) for the purpose of determining the personal holding company tax for such year, but not for the purpose of determining interest, additional amounts, or assessable penalties computed with respect to such personal holding company tax.
The deficiency dividend deduction shall be allowed as of the date the claim for the deficiency dividend deduction is filed.
If the allowance of a deficiency dividend deduction results in an overpayment of personal holding company tax for any taxable year, credit or refund with respect to such overpayment shall be made as if on the date of the determination 2 years remained before the expiration of the period of limitation on the filing of claim for refund for the taxable year to which the overpayment relates. No interest shall be allowed on a credit or refund arising from the application of this section.
For purposes of this section, the term “deficiency dividends” means the amount of the dividends paid by the corporation on or after the date of the determination and before filing claim under subsection (e), which would have been includible in the computation of the deduction for dividends paid under section 561 for the taxable year with respect to which the liability for personal holding company tax exists, if distributed during such taxable year. No dividends shall be considered as deficiency dividends for purposes of subsection (a) unless distributed within 90 days after the determination.
Deficiency dividends paid in any taxable year (to the extent of the portion thereof taken into account under subsection (a) in determining personal holding company tax) shall not be included in the amount of dividends paid for such year for purposes of computing the dividends paid deduction for such year and succeeding years.
Deficiency dividends paid in any taxable year (to the extent of the portion thereof taken into account under subsection (a) in determining personal holding company tax) shall not be allowed for purposes of section 563(b) in the computation of the dividends paid deduction for the taxable year preceding the taxable year in which paid.
If the corporation files a claim, as provided in subsection (e), the running of the statute of limitations provided in section 6501 on the making of assessments, and the bringing of distraint or a proceeding in court for collection, in respect of the deficiency and all interest, additional amounts, or assessable penalties, shall be suspended for a period of 2 years after the date of the determination.
No deficiency dividend deduction shall be allowed under subsection (a) if the determination contains a finding that any part of the deficiency is due to fraud with intent to evade tax, or to wilful failure to file an income tax return within the time prescribed by law or prescribed by the Secretary in pursuance of law.
(Aug. 16, 1954, ch. 736, 68A Stat. 191; Pub. L. 94–455, title XIX, §§ 1901(a)(78), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1777, 1834.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
Regulations under this section
Treasury regulations (26 CFR) issued under § 547
- § 1.547-1 General rule.
- § 1.547-2 Requirements for deficiency dividends.
- § 1.547-3 Claim for credit or refund.
- § 1.547-4 Effect on dividends paid deduction.
- § 1.547-5 Deduction denied in case of fraud or wilful failure to file timely return.
- § 1.547-6 Suspension of statute of limitations and stay of collection.
- § 1.547-7 Effective date.
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 5 other sections
- § 541 Imposition of personal holding company tax
- § 7121 Closing agreements
- § 561 Definition of deduction for dividends paid
- § 563(b) Rules relating to dividends paid after close of taxable year
- § 6501 Limitations on assessment and collection
Cited by 5 Code sections
- § 316(b)(2)(A)(ii) Dividend defined
- § 381(c)(17) Carryovers in certain corporate acquisitions
- § 6422(3) Cross references
- § 6503(k)(1) Suspension of running of period of limitation
- § 6515(1) Cross references
Cited in 3 regulations not issued under it
Amendment history
From the source credit and the official notes, newest first.
- Enacted by Pub. L. 94–455Parts changed in 1976: (c)(3) (h)
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter G Corporations Used to Avoid Income Tax on Shareholders
- Part II PERSONAL HOLDING COMPANIES
Nearby sections
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
1976—Subsecs. (c)(3), (e), (g). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing.
Subsec. (h). Pub. L. 94–455, § 1901(a)(78), struck out subsec. (h) relating to the effective date of provisions concerning deduction of deficiency dividends.
Statutory Notes and Related Subsidiaries
Effective Date of 1976 Amendment
Amendment by section 1901(a)(78) of 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.