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Property Defined for Dividend Rules

Pursuant to 26 USCS § 317, the term “property” means money, securities, and any other property; except that such term does not include stock in the corporation making the distribution (or rights to acquire such stock). Therefore, stock or stock rights are not considered property when a corporation distributes those to its shareholders as stock dividend.  26 CFR 1.317-1 provides that the term “property” also includes indebtedness to the corporation.  Property includes the indirect benefit received by a shareholder when a corporation assumes his liabilities.

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