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Retained Income Restrictions Dividends typically cannot be declared if those dividends would decrease retained income to a negative number. Some states require that dividends cannot be declared if the dividends reduce stockholders’ equity to below total paid-in capital. Retained Income Restrictions Restictions of retained income are usually disclosed in the notes to the financial statements. Some restrictions appear on the face of the balance sheet. Restricted retained income (appropriated retained income) - any part of retained income that may not be reduced by dividend declarations