Form 5452 (Non-Dividend Distribution)

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Ø  Who Must File Form 5452?

        All corporations that have made non dividend distributions to their shareholders must file Form            5452. If the corporation is a member of a consolidated group, the parent corporation must file                Form 5452.

Ø  WHEN TO FILE FORM 5452? 

      All corporations that have done non dividend distributions to their shareholders shall file Form 5452. If the corporation is the member of a consolidated group, the parent corporation must file Form 5452. 

      A S corporation shall file this form when distributions are made under section 

     1371(e): Any distribution of money by a corporation with respect to its stock during a post-termination transition period shall be applied against and reduce the adjusted basis of the stock, to the extent that the amount of the distribution does not exceed the accumulated adjustments account, 

      1371(f): Cash Distributions following Post- Termination Transition Period.

Ø  WHAT ARE NON-DIVIDEND DISTRIBUTIONS? 

      Non dividend distributions are distributions made to shareholders in the normal course of business. They are considered fully or partially non-taxable as dividends only because the paying corporation’s current and accumulated earnings and profits are less than the distributions. Non dividend distributions do not include tax-free stock dividends or distributions exchanged for stock in liquidations or redemptions.

       


 

The Point F is the reporting part, you have to report

·       Date of payment of Dividend.

·       Amount paid

·       Amount Per share

·       Amount paid from profit of Current Year

·       Amount paid from Accumulated Profits.

·       Percentage Taxable

o   For Example, we are distributed $10,000 as Non Dividend Distribution. We have Retained Earning total of $4920, so percentage taxable will be 4920/10000 (49.20%). Percentage Non-Taxable will be (10000-4920=$5080, $5080/10000*100 (50.8%))

 

It is reportable in Point 6 of Form 1120.

 

Compiled By

CA. Harsimran kaur.

 

 

 

 

 

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