A deemed dividend is a designated undistributed capital gain dividend.
A company with a deemed dividend pays the taxes on the value of the dividend and the shareholders increase the cost basis of their shares. This is of benefit to the shareholders as it reduces the tax obligation upon the sale of the shares. Shareholders should receive a Form 2439 from their broker when a deemed dividend is issued.
Related Fool Articles
Recent Mentions on Fool.com
- In Case You Missed It: GlaxoSmithKline Just Had a Phenomenal Week!
- 3 Stocks Near 52-Week Highs Worth Selling
- Was It a Huge Mistake for Sears to Get Rid of Lands' End?
- Australia Ashes Philip Morris: What's Next?
- S&P 500 Dividend Aristocrats: Reliably Growing Dividends
- A Growing Dividend Pick at Armageddon Prices