If the corporation cannot deduct the post-year dividends, it may choose to have the shareholders file for a consent dividend provided the consents are filed any time before the due date of the corporation's income tax return.
Rental income will not be considered PHC income if the rental income totals at least 50% of adjusted ordinary gross income and the sum of dividends paid, dividends considered paid, and consent dividends is at least equal to the amount by which other personal holding company income exceeds 10% of ordinary gross income.
shareholders agree to a consent dividend
election with respect to such earnings.
The IRS allowed a deemed consent dividend
at the end of the third year and thereby eliminated the corporation's AE&P.
The consent dividend
mechanism is a hypothetical distribution of a specified amount made by a corporation that has a reasonable basis to believe that it is subject to the AET.
The proposed regulations provide three ways to facilitate the distribution of E&P: (1) an AAA bypass election, (2) a PTI bypass election and (3) a deemed dividend election (25) This last election works like a consent dividend
Form 973 - Corporation Claim for Deduction for Consent Dividends
Chapter 6 of the book addresses basis issues, and covers deemed dividends, the new investment adjustment regime, excess loss accounts, and consent dividends
Form 973, Corporation Claim for Deduction for Consent Dividends
This seems a harsh and unfair result, because E&P is not frozen as to distributions, redemptions, consent dividends
SCRA Section 223 would statutorily allow consent dividends
, which are currently permitted only by Regs.