contingency reserve

  • Surplus that serves as a reserve to cover unexpected losses and to cover the shortfall if the company’s earned surplus in a particular year is not adequate to maintain the company’s previously announced dividend scale.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).