dividend equivalent amount
Defined in 1 dictionary — U.S. Code
United States Code
26 U.S.C. § 884 — in this section (3 versions over time)
For purposes of subsection (a), the term "dividend equivalent amount" means the foreign corporation's effectively connected earnings and profits for the taxable year adjusted as provided in this subsection:
(1) Reduction for increase in U.S. net equity
If—
(A) the U.S. net equity of the foreign corporation as of the close of the taxable year, exceeds
(B) the U.S. net equity of the foreign corporation as of the close of the preceding taxable year,
the effectively connected earnings and profits for the taxable year shall be reduced (but not below zero) by the amount of such excess.
(2) Increase for decrease in net equity
(A) In general
If—
(i) the U.S. net equity of the foreign corporation as of the close of the preceding taxable year, exceeds
(ii) the U.S. net equity of the foreign corporation as of the close of the taxable year,
the effectively connected earnings and profits for the taxable year shall be increased by the amount of such excess.
(B) Limitation
(i) In general
The increase under subparagraph (A) for any taxable year shall not exceed the accumulated effectively connected earnings and profits as of the close of the preceding taxable year.
(ii) Accumulated effectively connected earnings and profits