Form 5452 for Nondividend Distributions: Filing and Penalties

Form 5452, the Corporate Report of Nondividend Distributions, is filed by attaching it to your corporate income tax return for the year that covers the calendar year in which the distributions were made. These Form 5452 instructions walk through who has to file, what to put in each section, what to attach, and when it is due, drawing on the IRS instructions for the form.¹

When Form 5452 Is Required

A corporation must file Form 5452 for any calendar year in which it made a nondividend distribution to shareholders. A distribution is “nondividend” to the extent it exceeds the corporation’s current and accumulated earnings and profits (E&P); that excess is a return of capital rather than a dividend.¹

The filing is keyed to the calendar year of the distributions, even if the corporation reports on a fiscal year. In a consolidated group, the parent files on behalf of any subsidiary that made the distributions.

S corporations file only in narrower circumstances: distributions made under the post-termination transition rules of IRC 1371(e) or 1371(f), or in the year distributions fully exhaust accumulated E&P carried over from C corporation years.¹ Distributions coming solely out of an S corporation’s accumulated adjustments account (AAA) do not require Form 5452.

What You Need Before You Start

Form 5452 is a summary. The real work is the E&P computation that determines how each distribution is characterized. You need three numbers ready before touching the form: current-year E&P, accumulated E&P, and total distributions made during the calendar year.

The classification framework behind those numbers comes from IRC 301(c).² Distributions come out of current or accumulated E&P first, and that portion is a taxable dividend. Whatever exceeds E&P reduces the shareholder’s stock basis and is not taxed. Anything beyond remaining basis is capital gain to the shareholder. Form 5452 documents the corporation-level split; the corresponding amounts flow to shareholders through Form 1099-DIV, with the nondividend portion going in Box 3.³

A “dividend” for this purpose means a distribution out of current or accumulated E&P.⁴⁵⁶

One ordering rule matters when you write down the current and accumulated figures separately. Distributions come first from current E&P (allocated pro rata across distributions during the year), then from accumulated E&P in chronological order. A distribution is a dividend to the extent of current E&P even if accumulated E&P is negative. If current E&P is negative, distributions are dividends only up to accumulated E&P measured at the date of each distribution.⁴

Walking Through Sections A Through F

The top of the form asks for the corporation’s name and EIN. The six lettered sections follow.¹

Section A: Prior Filings

Indicate whether the corporation has filed Form 5452 for any earlier calendar year. If yes, list the year or years.

Section B: Liquidations

Indicate whether any of the distributions form part of a partial or complete liquidation. If yes, attach a detailed explanation.

Section C: S Corporation AAA

Indicate whether any distributions come from an S corporation’s accumulated adjustments account. This applies only to S corporations still carrying C corporation E&P.

Section D: E&P Figures

Enter the corporation’s calculated current-year E&P and accumulated E&P. These come directly from your supporting computation.

Section E: Shareholder Counts

Report the number of shareholders as of the date of the last distribution, broken into three groups: individuals, partnerships, and corporations or other entities.¹ The IRS uses this to cross-reference the 1099-DIV forms issued.

Section F: Distributions and Percentages

This is the core of the form. Report total distributions made during the calendar year and break them down by source: current-year E&P, accumulated E&P, and amounts paid from sources other than E&P.¹ The “other than E&P” line is the nondividend, return-of-capital portion.

Section F also requires the taxable and nontaxable percentages of the distributions, computed as the ratio of each source amount to total distributions. If, for example, 30% of total distributions came from sources other than E&P, that 30% is the nontaxable percentage. It applies uniformly to every distribution made during the year unless the corporation tracked interim E&P balances at each distribution date. These percentages drive the amounts reported on Form 1099-DIV.¹

If any distribution was made in property rather than cash, attach a statement showing both the tax basis and the fair market value of each distributed property.

Required Attachments

The form is short. The attachment package is not. The IRS requires all of the following:¹

A current-year E&P computation reconciling taxable income to the E&P figure, showing every adjustment.
An accumulated E&P schedule computed year by year, starting from the corporation’s origin, February 28, 1913, or the last year information was furnished to the IRS, whichever is latest.
A tax-basis balance sheet, if the corporation completed Schedule L on Form 1120, reflecting E&P-related differences across the balance sheet accounts.
A depreciation reconciliation, if E&P depreciation differs from the amount deducted on Form 1120.
A distribution schedule listing every distribution made during the calendar year, with dates and amounts.

Corporations with 12 or fewer shareholders also attach copies of the Forms 1099-DIV issued to those shareholders. Consolidated groups attach a schedule showing how consolidated tax liability was allocated among group members and identify the allocation method used.¹

When and How to File

Form 5452 is not filed separately. Attach it to the corporation’s income tax return. For calendar-year C corporations, that means with Form 1120, due April 15 of the following year.¹

Fiscal-year filers attach Form 5452 to the return for the first fiscal year that ends after the calendar year in which the nondividend distributions were made. Take a corporation with a June 30 fiscal year-end that makes nondividend distributions in October 2025. Those distributions fall in calendar year 2025. The first fiscal year ending after calendar year 2025 closes June 30, 2026, and Form 1120 for that fiscal year, with Form 5452 attached, is due October 15, 2026.

What Happens If You Don’t File

If Form 5452 is not filed, the IRS can treat the entire distribution as a taxable dividend up to the corporation’s total E&P.¹ That flips the burden of proof: instead of the IRS having to establish dividend treatment, the corporation would have to demonstrate return-of-capital treatment after the fact. Keep all books and records supporting the E&P calculation for as long as they remain relevant to any open tax year.

1
Internal Revenue Service. Instructions for Form 5452
2
Office of the Law Revision Counsel. 26 USC 301 – Distributions of Property
3
Internal Revenue Service. Form 1099-DIV
4
Justia Law. 26 USC 316 – Dividend Defined
5
eCFR. 26 CFR 1.312-6 – Earnings and Profits
6
Office of the Law Revision Counsel. 26 USC 312 – Effect on Earnings and Profits