The cost of issuing preferred stock by a corporation must be adjusted to an after-tax figure because of the 70 percent dividend exclusion provision for corporations holding other corporations' preferred stock.

Question

Quizplus · Accepted Answer

The cost of issuing preferred stock is not adjusted to an after-tax figure because preferred stock dividends are not tax-deductible for the issuing corporation. The 70 percent dividend exclusion applies to corporations receiving dividends, not issuing them.

The Cost of Issuing Preferred Stock by a Corporation Must