constructive dividend
- A form of profit, such as excessive compensation or unsanctioned use of corporate assets, given by a corporation to a shareholder, which tax entities comprehend as a regular company profit distribution
- The CEO was found liable for tax on the luxury car provided by the company as it was deemed a constructive dividend.
- An unusually high salary can be assessed as a constructive dividend, imposing additional tax obligations on the shareholder.
- His personal use of the corporation's vacation property was deemed a constructive dividend by the IRS.
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