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sustain respondent's position on brief that those distributions
are gains from the sale or exchange of property. Sec. 301(c)(2)
and (3)(A).
Dividends in Stock Under Dividend Reinvestment Programs
Prior to the years at issue, petitioners enrolled in the
respective dividend reinvestment programs of various companies in
which they owned shares of stock. Pursuant to those programs,
petitioners elected to receive dividends on those shares in
stock, rather than in cash. Pursuant to those elections, peti-
tioners received dividends in the amounts of $8,324.76,
$8,123.74, and $8,759.81 during 1992, 1993, and 1994, respec-
tively, that were paid in stock. They reported those respective
amounts as dividend income in their returns for those years.
Petitioners now claim that their return positions for the years
at issue were wrong and that those dividends in stock are not
includible in their income for those years. Respondent dis-
agrees.
Where dividends from a corporation are payable, at the
election of a stockholder, in stock or property, the distribution
of such dividends will be treated as a distribution of property
to which section 301 applies. Sec. 305(b)(1). On the record
before us, we find that the dividends in stock that petitioners
received under dividend reinvestment programs constitute dividend
income, as reported in their returns for the years at issue. Id.
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