# 26 U.S.C. § 561: Definition of deduction for dividends paid

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s561>. Cite pinpoints as 26 U.S.C. § 561(a)(1).

## § 561(a) General rule

The deduction for dividends paid shall be the sum of—

**§ 561(a)(1)** the dividends paid during the taxable year,

**§ 561(a)(2)** the consent dividends for the taxable year (determined under section 565), and

**§ 561(a)(3)** in the case of a personal holding company, the dividend carryover described in section 564.

## § 561(b) Special rules applicable

In determining the deduction for dividends paid, the rules provided in section 562 (relating to rules applicable in determining dividends eligible for dividends paid deduction) and section 563 (relating to dividends paid after the close of the taxable year) shall be applicable.

## Regulations

- [Treas. Reg. § 1.561-1](/26/reg/1.561-1.md): Deduction for dividends paid. (interprets § 561)
- [Treas. Reg. § 1.561-2](/26/reg/1.561-2.md): When dividends are considered paid. (interprets § 561)

## Leading cases

- [Fulman v. United States, 434 U.S. 528 (1978)](https://www.courtlistener.com/opinion/109774/fulman-v-united-states/)
- [Callan v. Commissioner, 54 T.C. 1514 (1970)](https://www.courtlistener.com/opinion/4702872/callan-v-commr/)
- [L. C. Bohart Plumbing & Heating Co. v. Commissioner, 64 T.C. 602 (1975)](https://www.courtlistener.com/opinion/4704081/l-c-bohart-plumbing-heating-co-v-commissioner/)

## Connections

Cites: § 562 Rules applicable in determining dividends eligible for dividends paid deduction; § 563 Rules relating to dividends paid after close of taxable year; § 564 Dividend carryover; § 565 Consent dividends

Cited by: § 162 Trade or business expenses; § 535 Accumulated taxable income; § 545 Undistributed personal holding company income; § 547 Deduction for deficiency dividends; § 564 Dividend carryover; § 565 Consent dividends; § 852 Taxation of regulated investment companies and their shareholders; § 857 Taxation of real estate investment trusts and their beneficiaries; § 860 Deduction for deficiency dividends; § 4981 Excise tax on undistributed income of real estate investment trusts; § 4982 Excise tax on undistributed income of regulated investment companies

Derived from: 1939 § 26(f); 1939 § 27(a)

## Amendments

- 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 198
- 1962-02-02: [Pub. L. 87-403](/26/act/87-403.md), 76 Stat. 8
- 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1800