Which of the following types of dividends would not be subject to a gross up and would not generate a dividend tax credit to the individual shareholder who receives it?

Question

Quizplus · Accepted Answer

A capital dividend is not subject to a gross up because it is paid out of the company's capital account instead of its retained earnings. It also does not generate a dividend tax credit for the individual shareholder who receives it. Therefore, option B is the correct answer.

A) A stock dividend is a distribution of additional shares to existing shareholders in proportion to their current holdings. It does not generate a tax liability or a dividend tax credit for individual shareholders.

C) A deemed dividend is a non-cash benefit received by a shareholder that is considered taxable income. It is subject to a gross up and generates a dividend tax credit for the individual shareholder.

D) A dividend in kind is a dividend paid out in the form of property, other than cash or shares. It is subject to a gross up and generates a dividend tax credit for the individual shareholder.

Which of the Following Types of Dividends Would Not Be