Allocation of dividends
Allocation of dividends(A) In general. For purposes of section 1297(b)(2)(C), the principles of 1.3162(a) apply in determining from what year's earnings and profits a dividend from a related person is treated as distributed. A dividend is considered to be distributed, first, out of the earnings and profits of the taxable year of the related person that includes the date the dividend is distributed (current earnings and profits) and that ends with or within the taxable year of the recipient; second, out of the earnings and profits accumulated for the immediately preceding taxable year of the related person; third, out of the earnings and profits accumulated for the second preceding taxable year of the related person; and so forth. For purposes of paragraph (c)(4)(iv) of this section, the principles of 1.2434(a)(6) apply with respect to a deficit in an earnings and profits account for a prior year.
(A)In general.For purposes of section 1297(b)(2)(C), the principles of 1.3162(a) apply in determining from what year's earnings and profits a dividend from a related person is treated as distributed. A dividend is considered to be distributed, first, out of the earnings and profits of the taxable year of the related person that includes the date the dividend is distributed (current earnings and profits) and that ends with or within the taxable year of the recipient; second, out of the earnings and profits accumulated for the immediately preceding taxable year of the related person; third, out of the earnings and profits accumulated for the second preceding taxable year of the related person; and so forth. For purposes ofparagraph (c)(4)(iv)of this section, the principles of 1.2434(a)(6) apply with respect to a deficit in an earnings and profits account for a prior year.