Liquidating Dividend
Accounting glossary · Understand, connect, apply
A liquidating dividend is a distribution that represents a return of shareholders’ contributed capital rather than a distribution of accumulated earnings.
Example
A company winding down returns part of investors’ original contributed capital after settling obligations.
Remember the difference
A payment’s label does not determine its tax treatment. Distinguish return of capital from an ordinary earnings dividend.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
← Return to the accounting glossary