Income Bond

Income Bond means:
an obligation on which the payment of interest is contingent on sufficient earnings from year to year. Such bonds are traded flat, that is, with no accrued interest, and for the debtor are often an alternative to bankruptcy. In some situations, the U.S. Internal Revenue Service may disallow any subsequent interest expense payment and reclassify the payments as disguised dividends (see also constructive dividends).

See Dividend in the American Legal Encyclopedia and Dividend in the World Legal Encyclopedia.