[Verse 1] When corporations earn their keep, the treasure chest begins to swell Earnings and profits track the wealth, current year and past as well Current E&P flows fresh, like morning rain upon the ground Accumulated stores the rest, years of surplus safe and sound [Chorus] Three-oh-one's the dividend dance, ordering rules in sequence clear Current first then accumulated, tax treatment crystal engineered Stock or cash or property gifts, each one has its special code Navigate the dividend maze, down the corporate tax law road [Verse 2] Sarah gets her dividend check, but where does taxation start Current E&P comes calling first, then accumulatedpart If the well runs dry completely, then return of capital Gain beyond her basis line, ordinary income shall [Chorus] Three-oh-one's the dividend dance, ordering rules in sequence clear Current first then accumulated, tax treatment crystal engineered Stock or cash or property gifts, each one has its special code Navigate the dividend maze, down the corporate tax law road [Bridge] Constructive dividends hide in plain sight Excessive salaries burning bright Below-market loans and bargain sales Section three-oh-five stock dividend tales [Verse 3] Stock splits multiply your shares, but three-oh-five keeps watch with care Proportionate means tax-free sailing, disproportionate beware Property distributions trigger, corporate gain at source revealed Fair market value minus basis, taxable income now unsealed [Chorus] Three-oh-one's the dividend dance, ordering rules in sequence clear Current first then accumulated, tax treatment crystal engineered Stock or cash or property gifts, each one has its special code Navigate the dividend maze, down the corporate tax law road [Outro] E&P determines fate, constructive payments calculate Stock and property distributions, tax law's corporate regulations
← 2 Corporate Income Tax Computation | 4 Redemptions and Partial Liquidations →