dividend
Definitions from Case Law · United States Supreme Court
Definitions from Case Law
From 302 U.S. 63 - Palmer v. Commissioner · 1937Most cited · 406 citing opinions
While a sale of corporate assets to stockholders is, in a literal sense, a distribution of its property, such a transaction does not necessarily fall within the statutory definition of a dividend. For a sale to stockholders may not result in any diminution of its net worth and in that case cannot result in any distribution of its profits. To transfer it from the one category to the other, it is at least necessary to make some showing that the transaction is in purpose or effect used as an implement for the distribution of corporate earnings to stockholders.
How the Supreme Court has restated “dividend”
Each Supreme Court definition of “dividend,” sized by how often later courts cited it. “Change” is measured by wording overlap with earlier definitions — a rough signal, not a semantic judgment.
How often courts cite the cases defining “dividend”
Court decisions citing the 6 opinions that defined “dividend” — 1,579 in all, by decade. Counts are citations to the defining cases as a whole, not verified uses of the term. The dip in the most recent years is a data-coverage gap, not a real trend — our corpus holds fewer opinions from the latest years.
All 6 definitions, chronological · 1925–1945
- ORIGINAL
partial payment to general creditors
the term 'dividend,' as generally understood and used, refers to the recurrent return upon stock paid to stockholders by a going corporation in the ordinary course of business, which does not reduce their stock holdings and leaves them in a position to enjoy future returns upon the same stock
In fixing the annual level premium, there is added to the sum required on the basis of the mortality table, and assumed rate of interest, an amount to cover anticipated expenses and contingencies. If the rate of mortality exactly coincided with the expected rate, and the income, expenses, and contingencies were precisely in accordance with the allowance made therefor, there would be no surplus and hence no dividends. But in the actual course of business there may be, and probably will be, gains from the fact that the mortality turns out to be less than that expected, or that the income is larger or the outlays are less than those estimated, and these gains are distributable to policyholders by means of 'dividends' in accordance with the provisions of policies.
life insurance
any distribution made by a corporation to its shareholders, * * * out of its earnings or profits accumulated after February 28, 1913
Under § 115(a) a distribution out of accumulated earnings and profits is a 'dividend', thus confirming the conclusion that a distribution of earnings and profits has the 'effect of the distribution of a taxable dividend' under § 112(c)(2).