Page:United States Statutes at Large Volume 68A.djvu/241

 CH.

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NORMAL TAXES AND SURTAXES

201

(2) an amount specified in a consent which would not constitute a dividend (as defined in section 316) if the total amounts specified in consents filed by the corporation had been distributed in money to shareholders on the last day of the taxable year of such corporation. (c) E F F E C T OF C O N S E N T. — The amount of a consent dividend shall be considered, for purposes of this title— (1) as distributed in money by the corporation to the shareholder on the last day of the taxable year of the corporation, and (2) as contributed to the capital of the corporation by the shareholder on such day. (d) CONSENT DIVIDENDS AND OTHER DISTRIBUTIONS.—If a distribution by a corporation consists in part of consent dividends and in part of money or other property, the entire amount specified in the consents and the amount of such money or other property shall be considered together for purposes of applying this title. (e) NONRESIDENT A L I E N S AND FOREIGN CORPORATIONS.—In

the

case of a consent dividend which, if paid in money would be subject to the provisions of section 1441 (relating to withholding of tax on nonresident aliens) or section 1442 (relating to withholding of tax on foreign corporations), this section shall not apply unless the consent is accompanied by money, or such other medium of payment as the Secretary or his delegate may by regulations authorize, in an amount equal to the amount that would be required to be deducted and withheld under sections 1441 or 1442 if the consent dividend had been, on the last day of the taxable year of the corporation, paid to the shareholder in money as a dividend. The amount accompanying the consent shall be credited against the tax imposed by this subtitle on the shareholder. (f) DEFINITIONS. — (1) CONSENT STOCK.—Consent

stock, for purposes of this section, means the class or classes of stock entitled, after the payment of preferred dividends, to a share in the distribution (other than in complete or partial liquidation) within the taxable year of all the remaining earnings and profits, which share constitutes the same proportion of such distribution regardless of the amount of such distribution. (2) P R E F E R R E D DIVIDENDS.—Preferred dividends, for purposes of this section, means a distribution (other than in complete or partial liquidation), limited in amount, which must be made on any class of stock before a further distribution (other than in complete or partial liquidation) of earnings and profits may be made within the taxable year.

§ 565(f)(2) 49012°—54——16

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