Get Form 972 (rev. February 1998). Consent Of Shareholder To Include Specific Amount In Gross Income

Section 1.565 - 1(c)(2) of the regulations provides, in part, that the full amounts specified on a consent will be taxable to the shareholder even though a consent dividend deduction may be denied to the corporation because it is determined that it is not a corporation subject to part I, II or III, subchapter G, ...

A consent is made on Form 972, Consent of Shareholder To Include Specific Amount in Gross Income, and it can only be made by or on behalf of the person who was the actual owner of any class of consent stock on the last day of the corporation's tax year.

PHC tax uses the consent dividend as a determination of the​ corporation's liability and thereby lowering​ it's liability, however the accumulated earnings tax is not a tax you plan to​ pay, so distributing consent dividends is not a factor in avoiding this tax.

A qualifying consent dividend is treated as paid to the taxpayer on the last day of the corporation's tax year and immediately contributed by the taxpayer as paid-in capital with expected consequences (see Explanation: §565, Qualified Distribution).

Purpose of form. Form 972 is used by a shareholder who agrees to report a consent dividend as taxable income in the form of a dividend on the shareholder's own tax return even though the shareholder receives no actual cash distribution of the consented amounts.

IRS Publication 972 is for those taxpayers who are eligible to claim Child Tax credit or Credit for Other Dependents on their US Federal Income Tax Return.

All the dividend income received are taxable and the TDS rate of 10% is charged if the dividend income paid is in excess of Rs. 5000. If the investor's annual income is below the exemption limit then he can submit the form 15G/15H for not deduction of TDS.