- 3 -
petitioner’s investment bank reported $34,496.90 in ordinary
dividends, which included the $18,432 at issue here. Petitioner
did not report the $18,432 on his Form 1040, U.S. Individual
Income Tax Return, for the year 2000.
Petitioner contends that the distribution of Nortel stock
was not a taxable dividend, but rather a tax-free “spinoff” as
part of a section 354 reorganization.
Section 61(a) provides that gross income includes all income
from whatever source derived, unless excludable by a specific
provision of the Code. Section 61(a)(7) lists dividends as
includable in gross income. Section 316(a) defines a dividend as
any distribution of property made by a corporation to its
shareholders out of accumulated or current earnings and profits.
Section 301(a) provides that a distribution of property (as
defined in section 317(a)) made by a corporation to a shareholder
with respect to its stock shall be treated in the manner provided
in subsection (c). Section 317(a) defines property as money,
securities, and any other property, except stock in the
corporation making the distribution. Section 301(c) provides
that a distribution which is a dividend (as defined in section
316) is includable in gross income. Section 301(b)(1) provides
that the amount of any distribution shall be the amount of money
received, plus the fair market value of the other property
received.
Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011