Capital Dividend Account - CDA

Dictionary Says

Definition of 'Capital Dividend Account - CDA'

A special corporate tax account which gives shareholders designated capital dividends, tax-free. This account is not recorded in the corporation's taxable accounting entries or financial statements. For this type of account, capital dividend is taken out from paid-in capital and not from retained earnings. As long as the company has this account, they can designate an appropriate amount of dividends as a capital dividend.
Investopedia Says

Investopedia explains 'Capital Dividend Account - CDA'

When capital dividends are paid out to shareholders, these are not taxable. The Capital Dividend Account is part of a tax provision whose goal it is to enable tax-free money received by a company, to then be given to its shareholders, tax free. Therefore, shareholders are not required to pay taxes on these distributions.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Capital Gain

    1. An increase ...
  2. Dividend

    1. A ...
  3. Taxable Gain

    A profit on the ...
  4. Capital Dividend

    A type of ...
  5. Return Of Capital

    A return from an ...
  6. Dividend Payout Ratio

    The percentage ...
  7. Profit Margin

    A ratio of ...
  8. Cumulative Dividend

    A sum that ...
  9. Dogs Of The Dow

    An investing ...
  10. Real Estate Investment Trust - REIT

    A security that ...

Articles Of Interest

  1. How And Why Do Companies Pay Dividends?

    Explore arguments for and against company dividend policy, and learn how companies determine how much to pay out.
  2. What Are Corporate Actions?

    Be a savvy investor - learn how corporate actions affect you as a shareholder.
  3. Your Dividend Payout: Can You Count On It?

    We go over several telling factors that can help you answer this question and avoid losses.
  4. Why Dividends Matter

    Seven words that are music to investors' ears? "The dividend check is in the mail."
  5. Dividends, Interest Rates And Their Effect On Stock Options

    Learn how analyzing these variables are crucial to knowing when to exercise early.
  6. Evaluating Retained Earnings: What Gets Kept Counts

    A company's retained earnings matter. Be investment-savvy and learn how to analyze this often overlooked information.
  7. How Dividends Work For Investors

    Find out how a company can put its profits directly into your hands.
  8. The Power Of Dividend Growth

    Dividends may not seem exciting, but they can certainly be lucrative. Learn more here!
  9. Dividend Facts You May Not Know

    Discover the issues that complicate these payouts for investors.
  10. Barking Up The Dogs Of The Dow Tree

    One well-known and successful strategy for cashing in on dividends is the Dogs of the Dow. Here's what you need to know about them.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center