### Question
How is the "nonqualified preferred stock" defined?


### Answer
The term **nonqualified preferred stock** is defined in *26 U.S.C. § 351* as follows -

> preferred stock if—


(i) the holder of such stock has the right to require the issuer or a related person to redeem or purchase the stock,


(ii) the issuer or a related person is required to redeem or purchase such stock,


(iii) the issuer or a related person has the right to redeem or purchase the stock and, as of the issue date, it is more likely than not that such right will be exercised, or


(iv) the dividend rate on such stock varies in whole or in part (directly or indirectly) with reference to interest rates, commodity prices, or other similar indices

#### Citation:
  - *26 U.S.C. § 351*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter C-Corporate Distributions and Adjustments > PART III-CORPORATE ORGANIZATIONS AND REORGANIZATIONS > Subpart A-Corporate Organizations**

