### Question
How does DISTRIBUTIONS BY CORPORATIONS define dividend?


### Answer
Under *26 U.S.C. § 316*, **dividend** is defined as:

> any distribution of property made by a corporation to its shareholders—



(1) out of its earnings and profits accumulated after February 28, 1913, or



(2) out of its earnings and profits of the taxable year (computed as of the close of the taxable year without diminution by reason of any distributions made during the taxable year), without regard to the amount of the earnings and profits at the time the distribution was made

#### Citation:
  - *26 U.S.C. § 316*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter C-Corporate Distributions and Adjustments > PART I-DISTRIBUTIONS BY CORPORATIONS > Subpart C-Definitions; Constructive Ownership of Stock**

