Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
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CHAPTER 39
DIVIDENDS AND CASH DISTRIBUTION
Section
§ 39.01 Definition of Dividends
§ 39.02 Dividends and Cash
§ 39.03 Federal Taxation of Dividends
§ 39.01 Definition of Dividends
Dividends are disbursements from corporate earnings and profits that
are distributed to shareholders.1 There are three major types of dividends:
(1) cash dividends, which are distributed in cash from legally available
funds; (2) property dividends, which are distributions of other than cash
or shares in the corporation; and (3) share dividends, which are portions
of additional shares for the shares already owned by the shareholder.2 In
this Section, the requirements for cash dividends will be discussed.
Generally, Minnesota state statutory provisions have the same rules for
cash and property dividends, so they will be treated as synonymous.
Some state statutes and securities exchange requirements differentiate
between cash and share dividends, so the requirements for share dividend
distributions will be discussed in Section 39.02.3
Corporations often distribute money and other assets to their
shareholders. Under federal tax law, when these distributions are made
out of the “earnings and profits” of the corporation either for the year or
over the life of the corporation, the distributions are defined as current or
accumulated “dividends.”4 Distributions made by corporations that have
no “earnings and profits,” and thus are not considered to be dividends,
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman