Legal Dictionary of Pakistan

Quick lookup for English, Urdu, and Latin legal terms used in Pakistani jurisprudence.

Bailout

n. 1. A rescue of an entity, usu. A corporation, from financial trouble. 2. An attempt by a business to receive favorable tax treatment of its profits, as by withdrawing profits at capital-gain rates rather than distributing stock dividends that would be taxed at higher ordinary-income rates.

Bailout stock

see stock.

bailout stock

Nontaxable preferred stock issued to stockholders as a dividend. ( Bailout stock is issued to gain favorable tax rates by distributing corporate earnings at capital gains rates rather than by distributing dividends at ordinary income rates. This practice is now prohibited by the Internal Revenue Code. IRC (26 USCA) § 306.

stock bailout

A stock redemption in the form of a preferred stock dividend.