# 26 U.S.C. § 563: Rules relating to dividends paid after close of taxable year

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s563>. Cite pinpoints as 26 U.S.C. § 563(a)(1).

## § 563(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 fourth month following the close of such taxable year shall be considered as paid during such taxable year.

## § 563(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 fourth 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—

**§ 563(b)(1)** The undistributed personal holding company income of the corporation for the taxable year, computed without regard to this subsection, or

**§ 563(b)(2)** 20 percent of the sum of the dividends paid during the taxable year, computed without regard to this subsection.

## § 563(c) 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) or (b) of this section, a distribution made after the close of a taxable year and on or before the 15th day of the fourth month following the close of the taxable year shall be considered as made on the last day of such taxable year.

## Regulations

- [Treas. Reg. § 1.563-1](/26/reg/1.563-1.md): Accumulated earnings tax. (interprets § 563)
- [Treas. Reg. § 1.563-2](/26/reg/1.563-2.md): Personal holding company tax. (interprets § 563)
- [Treas. Reg. § 1.563-3](/26/reg/1.563-3.md): Dividends considered as paid on last day of taxable year. (interprets § 563)

## Leading cases

- [Darrow v. Commissioner, 64 T.C. 217 (1975)](https://www.courtlistener.com/opinion/4704035/darrow-v-commissioner/)
- [Deviney Constr. Co. v. Commissioner, T.C. Memo. 1977-92](https://www.courtlistener.com/opinion/4815026/deviney-constr-co-v-commissioner/)

## Connections

Cites: § 531 Imposition of accumulated earnings tax; § 541 Imposition of personal holding company tax; § 562 Rules applicable in determining dividends eligible for dividends paid deduction

Cited by: § 316 Dividend defined; § 535 Accumulated taxable income; § 543 Personal holding company income; § 547 Deduction for deficiency dividends; § 561 Definition of deduction for dividends paid

Derived from: 1939 § 504(c)

## Amendments

- 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 199
- 1969-12-30: [Pub. L. 91-172](/26/act/91-172.md), 83 Stat. 723
- 1989-12-19: [Pub. L. 101-239](/26/act/101-239.md), 103 Stat. 2356
- 2004-10-22: [Pub. L. 108-357](/26/act/108-357.md), 118 Stat. 1507
- 2015-07-31: [Pub. L. 114-41](/26/act/114-41.md), 129 Stat. 457