- Join over 1.2 million students every month
- Accelerate your learning by 29%
- Unlimited access for just £4.99 per month
What are Dividends?
The first 200 words of this essay...
Dividends to shareholders are taxable only to the extent the payments are made from either Net Income (current earnings and profits) or Retained Earnings (accumulated earnings and profits).
* Return on Investment: EARNINGS AND PROFITS
* Return of Investment: CAPITAL cannot be chosen by a taxpayer
* Capital Gain: LIABILITIES
When a corporation issues a simple stock dividend, the shareholder does not realize income. However, if the shareholder has the option of receiving cash instead, he/she must realize the value of the stock received, rather than the cash rejected.
TAX BENEFIT RULE
If a taxpayer obtains a deduction for an item in one year and in a later year recovers all or the portion of the prior deduction, the recovery is included in gross income in the year received.
Example: In 1999 Mimi deducted as a loss a $1,000 receivable from the customer when it appeared the amount would never be collected. The following year, the customer paid $700 on the AR. Mimi must report that $700 as gross income in 2000.
INCOME FROM DISCHARGE OF INDEBTEDNESS
A transfer of appreciated property
Found what you're looking for?
- Start learning 29% faster today
- Over 150,000 essays available
- Just £4.99 a month
Not the one? We have 100's more
Accounting (view all)
- "Outline the differences between economic growth and ec...
- Define and analyse the advantages and disadvantages of the g...
- Understanding the Malaysian Economic Environment - a charact...
- Advanced macroeconomics, economic growth - the Solow model a...
- audit plan for aero inventory plc
""Sabreena, England. A Level Student. Biology and Chemistry.
""Dean Hil. l Media, Business, ICT, History and Sciences. University Student.