§ 1.565-6 Definitions.

(a) Consent stock. (1) The term consent stock includes what is generally known as common stock. It also includes participating preferred stock, the participation rights of which are unlimited. (2) The definition of consent stock may be illustrated by the following example: (b) Preferred dividends. (1) The term preferred dividends includes all fixed amounts (whether determined by percentage of par value, a stated return expressed in a certain number of dollars per share, or otherwise) the distribution of which on any class of stock is a condition precedent to a further distribution of earnings or profits (not including a distribution in partial or complete liquidation). A distribution, though expressed in terms of a fixed amount, is not a preferred dividend, however, unless it is preferred over a subsequent distribution within the taxable year upon some class or classes of stock other than one on which it is payable. (2) The definition of preferred dividends may be illustrated by the following example: