26 USC § 561 - Definition of deduction for dividends paid

---
identifier: "/us/usc/t26/s561"
source: "usc"
legal_status: "official_prima_facie"
title: "26 USC § 561 - Definition of deduction for dividends paid"
title_number: 26
title_name: "INTERNAL REVENUE CODE"
section_number: "561"
section_name: "Definition of deduction for dividends paid"
chapter_number: 1
chapter_name: "NORMAL TAXES AND SURTAXES"
subchapter_number: "G"
subchapter_name: "Corporations Used to Avoid Income Tax on Shareholders"
part_number: "IV"
part_name: "DEDUCTION FOR DIVIDENDS PAID"
positive_law: false
currency: "119-84"
last_updated: "2026-04-17"
format_version: "1.1.0"
generator: "[email protected]"
source_credit: "(Aug. 16, 1954, ch. 736, 68A Stat. 198; Pub. L. 87–403, § 3(f), Feb. 2, 1962, 76 Stat. 8; Pub. L. 94–455, title XIX, § 1901(b)(32)(H), Oct. 4, 1976, 90 Stat. 1800.)"
---


# § 561. Definition of deduction for dividends paid

**(a)** **General rule** The deduction for dividends paid shall be the sum of—

**(1)** the dividends paid during the taxable year,

**(2)** the consent dividends for the taxable year (determined under section 565), and

**(3)** in the case of a personal holding company, the dividend carryover described in section 564.

**(b)** **Special rules applicable** In determining the deduction for dividends paid, the rules provided in section 562 (relating to rules applicable in determining dividends eligible for dividends paid deduction) and section 563 (relating to dividends paid after the close of the taxable year) shall be applicable.

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**Source Credit**: (Aug. 16, 1954, ch. 736, 68A Stat. 198; Pub. L. 87–403, § 3(f), Feb. 2, 1962, 76 Stat. 8; Pub. L. 94–455, title XIX, § 1901(b)(32)(H), Oct. 4, 1976, 90 Stat. 1800.)

## Editorial Notes

### Amendments

1976—Subsec. (b).  redesignated existing provisions of par. (1) as subsec. (b) and struck out par. (2) relating to special adjustment on disposition of antitrust stock as a dividend.

1962—Subsec. (b).  designated existing provisions as par. (1) and added par. (2).

## Statutory Notes and Related Subsidiaries

### Effective Date of 1976 Amendment

Amendment by  applicable with respect to taxable years beginning after , see , set out as a note under .

### Effective Date of 1962 Amendment

Amendment by  applicable only with respect to distributions made after , see , set out as a note under .