59-7-108 - Distributions by corporations.
59-7-108. Distributions by corporations.
(1) For the purpose of this chapter, each distribution is made out of earnings or profits tothe extent thereof, and from the most recently accumulated earnings or profits. Any earnings orprofits accumulated or increase in value of property accrued before January 1, 1931, may beexcluded from taxable income after the earnings and profits accumulated after December 31,1930 have been distributed, but any such distribution shall be applied against and reduce the basisof the stock.
(2) If any distribution which is not in partial or complete liquidation is made by acorporation to its shareholders, is not out of increase in value of property accrued before January1, 1931, and is not out of earnings or profits, then the amount of such distribution shall be appliedagainst and reduce the basis of the stock. If the distribution is in excess of such basis, the excessshall be treated as a gain from the sale or exchange of property. The provisions of this subsectionalso apply to distributions from depletion reserves based on percentage depletion allowed by thischapter.
Repealed and Re-enacted by Chapter 169, 1993 General Session