
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC563]

 
                     TITLE 26--INTERNAL REVENUE 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
 
Sec. 563. Rules relating to dividends paid after close of 
        taxable year
        

(a) Accumulated earnings tax

    In the determination of the dividends paid deduction for purposes of 
the accumulated earnings tax imposed by section 531, a dividend paid 
after the close of any taxable year and on or before the 15th day of the 
third month following the close of such taxable year shall be considered 
as paid during such taxable year.

(b) Personal holding company tax

    In the determination of the dividends paid deduction for purposes of 
the personal holding company tax imposed by section 541, a dividend paid 
after the close of any taxable year and on or before the 15th day of the 
third month following the close of such taxable year shall, to the 
extent the taxpayer elects in its return for the taxable year, be 
considered as paid during such taxable year. The amount allowed as a 
dividend by reason of the application of this subsection with respect to 
any taxable year shall not exceed either--
        (1) The undistributed personal holding company income of the 
    corporation for the taxable year, computed without regard to this 
    subsection, or
        (2) 20 percent of the sum of the dividends paid during the 
    taxable year, computed without regard to this subsection.

(c) Foreign personal holding company tax

                           (1) In general

        In the determination of the dividends paid deduction for 
    purposes of part III, a dividend paid after the close of any taxable 
    year and on or before the 15th day of the 3rd month following the 
    close of such taxable year shall, to the extent the company 
    designates such dividend as being taken into account under this 
    subsection, be considered as paid during such taxable year. The 
    amount allowed as a deduction by reason of the application of this 
    subsection with respect to any taxable year shall not exceed the 
    undistributed foreign personal holding company income of the 
    corporation for the taxable year computed without regard to this 
    subsection.

                          (2) Special rules

        In the case of any distribution referred to in paragraph (1)--
            (A) paragraph (1) shall apply only if such distribution is 
        to the person who was the shareholder of record (as of the last 
        day of the taxable year of the foreign personal holding company) 
        with respect to the stock for which such distribution is made,
            (B) the determination of the person required to include such 
        distribution in gross income shall be made under the principles 
        of section 551(f), and
            (C) any person required to include such distribution in 
        gross or distributable net income shall include such 
        distribution in income for such person's taxable year in which 
        the taxable year of the foreign personal holding company ends.

(d) Dividends considered as paid on last day of taxable year

    For the purpose of applying section 562(a), with respect to 
distributions under subsection (a), (b), or (c) of this section, a 
distribution made after the close of a taxable year and on or before the 
15th day of the third month following the close of the taxable year 
shall be considered as made on the last day of such taxable year.

(Aug. 16, 1954, ch. 736, 68A Stat. 199; Pub. L. 91-172, title IX, 
Sec. 914(a), Dec. 30, 1969, 83 Stat. 723; Pub. L. 101-239, title VII, 
Sec. 7401(b), Dec. 19, 1989, 103 Stat. 2356.)


                               Amendments

    1989--Subsec. (c). Pub. L. 101-239, Sec. 7401(b)(1), added subsec. 
(c). Former subsec. (c) redesignated (d).
    Subsec. (d). Pub. L. 101-239, Sec. 7401(b)(2), substituted 
``subsection (a), (b), or (c)'' for ``subsection (a) or (b)''.
    Pub. L. 101-239, Sec. 7401(b)(1), redesignated former subsec. (c) as 
(d).
    1969--Subsec. (b)(2). Pub. L. 91-172 substituted ``20 percent'' for 
``10 percent''.


                    Effective Date of 1989 Amendment

    Amendment by Pub. L. 101-239 applicable to taxable years of foreign 
corporations beginning after July 10, 1989, with special rules for any 
foreign corporation required by the amendments made by section 7401 of 
Pub. L. 101-239 to change its taxable year for its first taxable year 
beginning after July 10, 1989, see section 7401(d) of Pub. L. 101-239, 
set out as an Effective Date note under section 898 of this title.


                    Effective Date of 1969 Amendment

    Section 914(b) of Pub. L. 91-172 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply to taxable years 
beginning after December 31, 1969.''

                  Section Referred to in Other Sections

    This section is referred to in sections 316, 535, 543, 547, 561 of 
this title.
