California Civil Code

§ 731.07

CIV § 731.07Div. 2 · Title 2 · Part 1 · Ch. 2.6

Statute text

(a)All dividends on shares of a corporation forming a part of the principal which are payable

(1)In shares of the declaring corporation of the same kind and rank as the shares on which such dividend is paid; and

(2)In shares of the declaring corporation of a different kind or rank to the extent that they represent a capitalization of surplus not derived from earnings, shall be deemed principal. Subject to the provisions of this section, all dividends, other than those awarded to principal under (1) and (2) above, including ordinary and extraordinary dividends and dividends payable in shares or other securities or obligations of corporations other than the declaring corporation, shall be deemed income. Where the tenant shall have the option of receiving a dividend either in cash or in the shares of the declaring corporation, it shall be considered as a cash dividend and deemed income, irrespective of the choice made by the tenant except as provided in subdivision (f) of this section.

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Legislative history

Added by Stats. 1968, Ch. 193.