stock dividend
Definitions from Case Law · United States Supreme Court
Definitions from Case Law
From 245 U.S. 418 - Towne v. Eisner · 1918Most cited · 1,065 citing opinions
not income
A stock dividend really takes nothing from the property of the corporation, and adds nothing to the interests of the shareholders. Its property is not diminished, and their interests are not increased. The proportional interests of each shareholder remains the same. The only change is in the evidence which represents that interest, the new shares and the original shares together representing the same proportional interest that the original shares represented before the issue of new ones.
How the Supreme Court has restated “stock dividend”
Each Supreme Court definition of “stock 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 “stock dividend”
Court decisions citing the 3 opinions that defined “stock dividend” — 1,657 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 3 definitions, chronological · 1918–1936
A stock dividend really takes nothing from the property of the corporation, and adds nothing to the interests of the shareholders. Its property is not diminished, and their interests are not increased. After such a dividend, as before, the corporation has the title in all the corporate property; the aggregate interests therein of all the shareholders are represented by the whole number of shares; and the proportional interest of each shareholder remains the same. The only change is in the evidence which represents that interest; the new shares and the original shares together representing the same proportional interest that the original shares represented before the issue of new ones.
Under our decisions the payment of a dividend of new common shares, conferring no different rights or interests than did the old, the new certificates, plus the old, representing the same proportionate interest in the net assets of the corporation as did the old, does not constitute the receipt of income by the stockholder. On the other hand, where a stock dividend gives the stockholder an interest different from that which his former stock holding represented he receives income. The latter type of dividend is taxable as income under the Sixteenth Amendment.
as income