Preferential Distribution.
Preferential Distribution.
(1) A preferential distribution is an actual distribution, or a consent distribution, or a combination of the two, which involves a preference to one or more shares of stock as compared with other shares of the same class or to one class of stock as compared with any other class of stock. See section 562(c) and § 1.562-2.
(2) The application of section 565 (b) (1) and § 1.565-2 (b) may be illustrated by the following examples:
(1) A preferential distribution is an actual distribution, or a consent distribution, or a combination of the two, which involves a preference to one or more shares of stock as compared with other shares of the same class or to one class of stock as compared with any other class of stock. See section 562(c) and § 1.562-2.
(2) The application of section 565 (b) (1) and § 1.565-2 (b) may be illustrated by the following examples:
(c) Section 316 Limitation.
(1) An additional limitation under section 565 (b) is that the amounts specified in consents which may be treated as consent dividends cannot exceed the amounts which would constitute a dividend (as defined in section 316) if the corporation had distributed the total specified amounts in money to shareholders on the last day of the taxable year of the corporation. If only a portion of such total would constitute a dividend, then only a corresponding portion of each specified amount is treated as a consent dividend.
(2) The application of section 565 (b) (2) and § 1.565-2 (c) may be illustrated by the following example: