《税收概述》（英文版） Chapter 4 Corporate Non-liquidating

Chapt Corporate NoBaiquidating

1 Chapter 4: Corporate Non-liquidating Distributions

NON-LIQUIDATING DISTRIBUTIONS (1 of 2) Non-liquidating distributions in general Computing current E&P Current vs, accumulated e&P Non-liquidating property distributions Constructive dividends

2 NON-LIQUIDATING DISTRIBUTIONS(1 of 2) Non-liquidating distributions in general Computing current E&P Current vs. accumulated E&P Non-liquidating property distributions Constructive dividends

NONLIQUIDATING DISTRIBUTIONS (2 of 2) Stock dividends and stock rights Stock redemptions Preferred stock bailouts Redemptions by related corporations 3

3 NONLIQUIDATING DISTRIBUTIONS(2 of 2) Stock dividends and stock rights Stock redemptions Preferred stock bailouts Redemptions by related corporations

Non-liquidating Distributions (1 of 2 Dividend distributions a distribution of property based upon a corporations earnings profits Property includes money, securities other assets Does not include stock or stock rights of distributing corp Dividends treated as by s/h

4 Non-liquidating Distributions (1 of 2) Dividend distributions –A distribution of property based upon a corporation’s earnings & profits –Property includes money, securities & other assets –Does not include stock or stock rights of distributing corp –Dividends treated as by s/h

Non-iquidating Distributions (2 of 2) Earnings and profits(E&P) E&P not defined in the code E&P consists of current accumulated Distributions are based upon current E&P first accumulated e&P second Distributions in excess of e&P are considered a return of capital

5 Non-liquidating Distributions (2 of 2) Earnings and profits (E&P) –E&P not defined in the Code. –E&P consists of current & accumulated –Distributions are based upon current E&P first & accumulated E&P second –Distributions in excess of E&P are considered a return of capital

Computing Current E&P (1of2) E&P computed on annual basis at end of tax year Generally e&P based on the corps economic income instead of taxable income Adjustments to taxable income for permanent timing differences including use of different depreciation methods Refer to Table c4-1 6

6 Computing Current E&P (1 of 2) E&P computed on annual basis at end of tax year Generally E&P based on the corp’s economic income instead of taxable income Adjustments to taxable income for permanent & timing differences including use of different depreciation methods Refer to Table C4-1

Computing Current E&P (2of3) Taxable income Plus Income excluded from taxable income but included in E&P Income deferred to a later year when computing taxable income but included in E&P in the current year Continued on the next slide 7

7 Computing Current E&P (2 of 3) Taxable income Plus – Income excluded from taxable income but included in E&P – Income deferred to a later year when computing taxable income but included in E&P in the current year Continued on the next slide

Computing Current E&P (3of3) Plus or minus Income deduction items that must be recomputed when computing E&P Plus Deductions that reduce taxable income but are not allowed in computing E&P Minus Expenses losses that are not deductible in computing taxable income but that reduce E&P Equals current E&P(or current E&P deficit 8

8 Computing Current E&P (3 of 3) Plus or minus – Income & deduction items that must be recomputed when computing E&P Plus – Deductions that reduce taxable income but are not allowed in computing E&P Minus – Expenses & losses that are not deductible in computing taxable income but that reduce E&P Equals current E&P (or current E&P deficit)

Current vs Accumulated E&P(1 of 2y Current E&P computed on last day of the corp's tax year Distributions in excess of ce&P are allocated pro rata to ce&P regardless of payment date then deducted from Accumulated E&P in chronological order 9

9 Current vs Accumulated E&P(1 of 2) Current E&P computed on last day of the corp’s tax year Distributions in excess of CE&P are – allocated pro rata to CE&P regardless of payment date – then deducted from Accumulated E&P in chronological order

Current vs Accumulated E&P(2o2) Distributions in excess of e&P Cannot create an e&p deficit Normally produce ordinary income to s/h If CE&P is positive and beginning AE&P is a deficit distributions will produce ordinary income to s/h until CE&P reaches zero 10

10 Current vs Accumulated E&P(2 of 2) Distributions in excess of E&P –Cannot create an E&P deficit –Normally produce ordinary income to s/h – If CE&P is positive and beginning AE&P is a deficit, distributions will produce ordinary income to s/h until CE&P reaches zero