Definition of Accumulating shares:
Common stock (ordinary shares) issued to current stockholders of the firm in lieu of a dividend, to help them avoid paying income tax. Capital-gains tax, however, must be paid on such shares.
Sometimes companies pay out these types of shares in addition to cash dividends in the form of stock dividends.
Accumulating shares is a classification of common stock given to shareholders of a company in lieu of, or in addition to, a dividend. By taking accumulating shares instead of cash dividends, shareholders don't have to pay income tax on the distributions in the current year; however, it is still mandatory to pay capital gains tax, if any, in the year when the shares are sold.
How to use Accumulating shares in a sentence?
- Accumulating shares is a compensation given to employees or shareholders in the form of stock rather than cash, often for beneficial tax purposes.
- Stock dividends are also a form of accumulating shares that give shareholders the same tax-deferred benefit.
- Employee bonuses paid in stock are sometimes preferred as they defer tax liability to the time of sale.
Meaning of Accumulating shares & Accumulating shares Definition