Guest gkaley Posted January 2, 2002 Posted January 2, 2002 The ESOP Answer Book states that an employer must show profits/earnings in order to have dividends be deductible. However, there is no reference to guidance. Any help?
RLL Posted January 2, 2002 Posted January 2, 2002 Hi gkaley --- In order to be deductible under IRC section 404(k), the payment must be a "dividend" under IRC Subchapter C. Accordingly, it must be paid out of current or accumulated "earnings and profits." Also, it must be a dividend under applicable corporate law.
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