In the case of a corporation, there shall be allowed as a deduction an amount computed as follows:
(1)First determine the amount received as dividends on the preferred stock of a public utility which is subject to taxation under this chapter and with respect to which the deduction provided in section
247 for dividends paid is allowable.
(2)Then multiply the amount determined under paragraph (1) by the fraction—
(A)the numerator of which is 14 percent, and
(B)the denominator of which is that percentage which equals the highest rate of tax specified in section
(3)Finally ascertain the amount which is 70 percent of the excess of—
(A)the amount determined under paragraph (1), over
(B)the amount determined under paragraph (2).
If the dividends described in subsection (a)(1) are qualifying dividends (as defined in section
243(b)(1), but determined without regard to section
(1)subsection (a) shall be applied separately to such qualifying dividends, and
(2)for purposes of subsection (a)(3), the percentage applicable to such qualifying dividends shall be 100 percent in lieu of 70 percent.
1987—Subsecs. (a)(3), (b)(2). Pub. L. 100–203substituted “70 percent” for “80 percent”.
1986—Subsecs. (a)(3), (b)(2). Pub. L. 99–514substituted “80 percent” for “85 percent”.
1978—Subsec. (a)(2)(B). Pub. L. 95–600substituted “the highest rate of tax specified in section
11(b)” for “the sum of the normal tax rate and the surtax rate for the taxable year prescribed by section
1964—Pub. L. 88–272designated existing provisions as subsec. (a) and added subsec. (b).
Effective Date of 1988 Amendment
Amendment by Pub. L. 100–647effective, except as otherwise provided, as if included in the provisions of the Revenue Act of 1987, Pub. L. 100–203, title X, to which such amendment relates, see section 2004(u) ofPub. L. 100–647, set out as a note under section
56 of this title.
Effective Date of 1987 Amendment
Amendment by Pub. L. 100–203applicable to dividends received or accrued after Dec. 31, 1987, in taxable years ending after such date, see section 10221(e)(1) ofPub. L. 100–203, set out as a note under section
243 of this title.
Effective Date of 1986 Amendment
Amendment by Pub. L. 99–514applicable to dividends received or accrued after Dec. 31, 1986, in taxable years ending after such date, see section 611(b) ofPub. L. 99–514, set out as a note under section
246 of this title.
Effective Date of 1978 Amendment
Amendment by Pub. L. 95–600applicable to taxable years beginning after Dec. 31, 1978, see section 301(c) ofPub. L. 95–600, set out as a note under section
11 of this title.
Effective Date of 1964 Amendment
Amendment by Pub. L. 88–272applicable to dividends received in taxable years ending after Dec. 31, 1963, see section 214(c) ofPub. L. 88–272, set out as a note under section
243 of this title.
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
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Description of Change
Statutes at Large
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