Liquidating dividend from an investee

by  |  15-Dec-2016 11:29

The undistributed earnings give rise to a deferred tax liability ("DTL") payable when the earnings are ultimately distributed, or the investment is liquidated.

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Dividends are those delightful distributions of cash you receive from your shares of stock and mutual funds.

Corporations also can receive dividends by owning dividend-paying stock of other corporations.

Corporations distribute dividends from the equity account called retained earnings, which records the accumulated profits of the company.

Dividends are not tax deductible to the payer; they represent the conversion of corporation equity to investor income.

Generally, ownership falls into three categories: controlling interest, significant influence, and passive interest.

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