Show 4 I 1 Income Tax l No 2 The tax tox on dividends dividend I la an Im- Im Important Important Im Important Item In th the retUrns of or many taxpayers A dividend as Ils defined t I by tho the regul regu regulations tattoos under the reve te revenue nue flue act of ot 1924 comprises any os ule- ule in the ordinary course of o business even though In amount mado made by a 3 corporation to tn It Its shareholders out of ot Its cern cern- or profits sins linKs 28 26 1913 1917 While di 11 Id are aro generally paid In to cash thy they th I thyI may be bo paid In securities B or ar other ther For example pIe a 1 corput- corput atlon I atlon may distribute among its stockholders securities In which hrh It I hRS has Invested Its earnings o Such se- se securities i c no matter motter what hat their nA- nA nAture nature na nature ture are aro to bo be reported as ditl- ditl dh Ihl I denda by the Ule stockholders at th the fair market lalue of ot the lle date dato of It the receipt A taxable distribution nade h by bya hia a corporation Is la Income to the as of o the dale date when the cash aRh or ar property vis lS uth- uth mad made subject to their their oe- oe oe-mandi oe mends regardless of fir when the tho earnings or profits out aut which they Ihy were ere paid were h CI dividends ds In the hands hand of or the She In- In Individual In Individual while exempt from 11 normal tax tax are subject to the She cur sur surtax surtax tax rates for tor the Lear icar ar in to re- re received re received c I A sto stockholder stockholder pets s i r a o nor nor- normil normal nor normal mal mil tax on en dividend for tor or the tho on ea eason Bon oa-Bon re-I re son that the tho corporation which lie de dareo dares them Ihm t Li Is subject to 10 the nor nor- normal normal mal tax on the earnings out orl of whIch the they are aro paid The Th tax on 1 corporations Is per cent nt cf rf the tho thenet thenet net Income subject to tax thoI I The ThO supreme court has haa held that the tho Issuance ot of o It Id its own awn tock stock ly hy a I corporation as IlS n a o dividend t to its does not taxa taxable hIe Income The 1 revenue ePt t or of 1924 1024 specifically that n stock dividend sh shell 11 not act ha ho sub sub- subject sub subject feet to ta the tax but It if 1 before or nr I after Cler the tho distribution ot of any soy such dividend the carpI corporation ration proceeds d to ta cancel or ar redeem ll II Its at such ouch lino and In such matinee mannas as asto asto asto to make mako the tho distribution and can cancellation or redemption es ee e calto le n t to tho the distribution of at a taxable dividend the tho nn so distributed In redemption or can o 0 stock hall bj ba treat treat- treated treat treat-cd ed cd as na a taxable |