Internal Revenue Code · 26 U.S.C.
§ 565. Consent 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. § 565
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
- 6 subsections · 568 words · about 2 min to read
- Cross-references
- cites 5; cited by 2 Code sections and 3 other regulations
- Regulations
- 6 issued under this section
If any person owns consent stock (as defined in subsection (f)(1)) in a corporation on the last day of the taxable year of such corporation, and such person agrees, in a consent filed with the return of such corporation in accordance with regulations prescribed by the Secretary, to treat as a dividend the amount specified in such consent, the amount so specified shall, except as provided in subsection (b), constitute a consent dividend for purposes of section 561 (relating to the deduction for dividends paid).
If a distribution by a corporation consists in part of consent dividends and in part of money or other property, the entire amount specified in the consents and the amount of such money or other property shall be considered together for purposes of applying this title.
In the case of a consent dividend which, if paid in money would be subject to the provisions of section 1441 (relating to withholding of tax on nonresident aliens) or section 1442 (relating to withholding of tax on foreign corporations), this section shall not apply unless the consent is accompanied by money, or such other medium of payment as the Secretary may by regulations authorize, in an amount equal to the amount that would be required to be deducted and withheld under sections 1441 or 1442 if the consent dividend had been, on the last day of the taxable year of the corporation, paid to the shareholder in money as a dividend. The amount accompanying the consent shall be credited against the tax imposed by this subtitle on the shareholder.
Consent stock, for purposes of this section, means the class or classes of stock entitled, after the payment of preferred dividends, to a share in the distribution (other than in complete or partial liquidation) within the taxable year of all the remaining earnings and profits, which share constitutes the same proportion of such distribution regardless of the amount of such distribution.
Preferred dividends, for purposes of this section, means a distribution (other than in complete or partial liquidation), limited in amount, which must be made on any class of stock before a further distribution (other than in complete or partial liquidation) of earnings and profits may be made within the taxable year.
(Aug. 16, 1954, ch. 736, 68A Stat. 200; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
Regulations under this section
Treasury regulations (26 CFR) issued under § 565
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 5 other sections
- § 561 Definition of deduction for dividends paid
- § 562(c) Rules applicable in determining dividends eligible for dividends paid deduction
- § 316 Dividend defined
- § 1441 Withholding of tax on nonresident aliens
- § 1442 Withholding of tax on foreign corporations
Cited by 2 Code sections
- § 543(a)(2)(B)(iii) Personal holding company income
- § 561(a)(2) Definition of deduction for dividends paid
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: (a)
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 IV DEDUCTION FOR DIVIDENDS PAID
Nearby sections
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
1976—Subsecs. (a), (e). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.