A dividend may be paid in property such as securities of another corporation or merchandise. You report as income the fair market value of the property. A dividend paid in property is sometimes called a dividend in kind.
On an audit, the IRS may charge that a benefit given to a shareholder-employee should be taxed as a constructive dividend. For example, the Tax Court agreed with the IRS that a corporation’s payment for a license that gave the sole shareholder the right to buy season tickets to Houston Texans football games was a constructive dividend.
18.119.167.173