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A corporation's payout of profits to its shareholders is known as a dividend. A corporation is able to distribute a portion of its profit as a dividend to shareholders when it generates a profit or surplus. Any remaining funds are seized and reinvested in the company (called retained earnings). A corporation is typically not allowed to pay a dividend out of its capital; therefore, both the current year's profit and the retained earnings from prior years are eligible for distribution. If the company has a dividend reinvestment plan, the amount can be paid via the issue of additional shares or by share repurchase. Alternatively, distribution to shareholders may be made in cash (often a deposit into a bank account). There are times when the distribution may. A shareholder's dividend is considered their own income and could be liable to income tax (see dividend tax).This income is taxed in various ways depending on the jurisdiction. The dividends paid by the corporation are not tax deductible. Shareholders receive a dividend in proportion to their holdings, which is distributed as a fixed sum per share. Dividends have the potential to increase shareholder morale and offer predictable income. Paying dividends is not an expense for a joint stock firm; rather, it is the distribution of after-tax profits to shareholders. Retained earnings, or profits that have not been paid out as dividends, are reported in the same area of the balance sheet as issued share capital as shareholders' equity. Public corporations typically pay dividends on a set timetable, but they may declare a dividend at any time. This payment is frequently referred to as a special dividend to set it apart from the dividends paid on a set schedule. The most typical type of payment is cash dividends, which are given out in money and typically done so either an electronic funds transfer or a physical check. Such dividends are a type of shareholder investment income that are often considered earned in the year they are paid (and not necessarily in the year a dividend was declared). There is a declared sum of money distributed for each share owned. The holder of the stock will receive $50 if they own 100 shares and the cash dividend is 50 cents per share. Dividends are considered a deduction from retained earnings rather than an expense. Dividend payments are recorded on the balance sheet rather than the income statement.