
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC244]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
             PART VIII--SPECIAL DEDUCTIONS FOR CORPORATIONS
 
Sec. 244. Dividends received on certain preferred stock


(a) General rule

    In the case of a corporation, there shall be allowed as a deduction 
an amount computed as follows:
        (1) First determine the amount received as dividends on the 
    preferred stock of a public utility which is subject to taxation 
    under this chapter and with respect to which the deduction provided 
    in section 247 for dividends paid is allowable.
        (2) Then multiply the amount determined under paragraph (1) by 
    the fraction--
            (A) the numerator of which is 14 percent, and
            (B) the denominator of which is that percentage which equals 
        the highest rate of tax specified in section 11(b).

        (3) Finally ascertain the amount which is 70 percent of the 
    excess of--
            (A) the amount determined under paragraph (1), over
            (B) the amount determined under paragraph (2).

(b) Exception

    If the dividends described in subsection (a)(1) are qualifying 
dividends (as defined in section 243(b)(1), but determined without 
regard to section 243(d)(4))--
        (1) subsection (a) shall be applied separately to such 
    qualifying dividends, and
        (2) for purposes of subsection (a)(3), the percentage applicable 
    to such qualifying dividends shall be 100 percent in lieu of 70 
    percent.

(Aug. 16, 1954, ch. 736, 68A Stat. 73; Pub. L. 88-272, title II, 
Sec. 214(b)(1), Feb. 26, 1964, 78 Stat. 55; Pub. L. 95-600, title III, 
Sec. 301(b)(3), Nov. 6, 1978, 92 Stat. 2820; Pub. L. 99-514, title VI, 
Sec. 611(a)(2), Oct. 22, 1986, 100 Stat. 2249; Pub. L. 100-203, title X, 
Sec. 10221(a)(2), Dec. 22, 1987, 101 Stat. 1330-408; Pub. L. 100-647, 
title II, Sec. 2004(i)(2), Nov. 10, 1988, 102 Stat. 3603.)


                               Amendments

    1988--Subsec. (b). Pub. L. 100-647 substituted ``section 243(d)(4)'' 
for ``section 243(c)(4)''.
    1987--Subsecs. (a)(3), (b)(2). Pub. L. 100-203 substituted ``70 
percent'' for ``80 percent''.
    1986--Subsecs. (a)(3), (b)(2). Pub. L. 99-514 substituted ``80 
percent'' for ``85 percent''.
    1978--Subsec. (a)(2)(B). Pub. L. 95-600 substituted ``the highest 
rate of tax specified in section 11(b)'' for ``the sum of the normal tax 
rate and the surtax rate for the taxable year prescribed by section 
11''.
    1964--Pub. L. 88-272 designated existing provisions as subsec. (a) 
and added subsec. (b).


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-647 effective, except as otherwise 
provided, as if included in the provisions of the Revenue Act of 1987, 
Pub. L. 100-203, title X, to which such amendment relates, see section 
2004(u) of Pub. L. 100-647, set out as a note under section 56 of this 
title.


                    Effective Date of 1987 Amendment

    Amendment by Pub. L. 100-203 applicable to dividends received or 
accrued after Dec. 31, 1987, in taxable years ending after such date, 
see section 10221(e)(1) of Pub. L. 100-203, set out as a note under 
section 243 of this title.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 applicable to dividends received or 
accrued after Dec. 31, 1986, in taxable years ending after such date, 
see section 611(b) of Pub. L. 99-514, set out as a note under section 
246 of this title.


                    Effective Date of 1978 Amendment

    Amendment by Pub. L. 95-600 applicable to taxable years beginning 
after Dec. 31, 1978, see section 301(c) of Pub. L. 95-600, set out as a 
note under section 11 of this title.


                    Effective Date of 1964 Amendment

    Amendment by Pub. L. 88-272 applicable to dividends received in 
taxable years ending after Dec. 31, 1963, see section 214(c) of Pub. L. 
88-272, set out as a note under section 243 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 172, 243, 246, 246A, 247, 
263, 277, 301, 469, 512, 805, 810, 812, 815, 832, 833, 1059, 1244 of 
this title.
