
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: 26USC564]

 
                     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. 564. Dividend carryover


(a) General rule

    For purposes of computing the dividends paid deduction under section 
561, in the case of a personal holding company the dividend carryover 
for any taxable year shall be the dividend carryover to such taxable 
year, computed as provided in subsection (b), from the two preceding 
taxable years.

(b) Computation of dividend carryover

    The dividend carryover to the taxable year shall be determined as 
follows:
        (1) For each of the 2 preceding taxable years there shall be 
    determined the taxable income computed with the adjustments provided 
    in section 545 (whether or not the taxpayer was a personal holding 
    company for either of such preceding taxable years), and there shall 
    also be determined for each such year the deduction for dividends 
    paid during such year as provided in section 561 (but determined 
    without regard to the dividend carryover to such year).
        (2) There shall be determined for each such taxable year whether 
    there is an excess of such taxable income over such deduction for 
    dividends paid or an excess of such deduction for dividends paid 
    over such taxable income, and the amount of each such excess.
        (3) If there is an excess of such deductions for dividends paid 
    over such taxable income for the first preceding taxable year, such 
    excess shall be allowed as a dividend carryover to the taxable year.
        (4) If there is an excess of such deduction for dividends paid 
    over such taxable income for the second preceding taxable year, such 
    excess shall be reduced by the amount determined in paragraph (5), 
    and the remainder of such excess shall be allowed as a dividend 
    carryover to the taxable year.
        (5) The amount of the reduction specified in paragraph (4) shall 
    be the amount of the excess of the taxable income, if any, for the 
    first preceding taxable year over such deduction for dividends paid, 
    if any, for the first preceding taxable year.

(Aug. 16, 1954, ch. 736, 68A Stat. 200; Pub. L. 94-455, title XIX, 
Sec. 1901(a)(81), Oct. 4, 1976, 90 Stat. 1778.)


                               Amendments

    1976--Subsec. (c). Pub. L. 94-455 struck out subsec. (c) which 
related to the determination of dividend carryover from taxable years to 
which this subtitle does not apply.


                    Effective Date of 1976 Amendment

    Amendment by Pub. L. 94-455 applicable with respect to taxable years 
beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, 
set out as a note under section 2 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 381, 561 of this title.
