And in response to @passingmagic comments, anyone thinking of doing this had better have a one on one with a tax professional.
Dividends paid out of a C corporation MUST come out of a corporations earnings and profits. This is NOT the same as taxable income.
There is a separate calculation that is required to be made to support any 1099 -DIV amounts being paid out. This is a cumulative calculation and must be updated annually.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
