35 Miss. Code. R. 3-02-06-108

Current through October 31, 2024

Section 35-3-02-06-108

Exceptions to the general tax-free treatment of stock dividends occur when a stock dividend results in a change in the proportionate ownership or increases a shareholder's interest in the assets or earnings and profits of the corporation. When an exception applies, the stock dividend must be recognized as income at the fair market value of the distributed stock as of the date of distribution. Stock dividends are generally gross income to shareholders in the following situations:

a. A distribution in which any shareholder has the option to receive cash or other property instead of stock in the distributing corporation;

b. Disproportionate distribution of stock;

c. Any distribution of stock which results in some common shareholders receiving preferred stock and the other common shareholders receiving common stock;

d. Distribution on preferred stock; and

e. Distribution of convertible preferred stock.

35 Miss. Code. R. 3-02-06-108

Adopted 1/1/2021