A corporation is generally entitled to an income tax deduction for cash dividends paid to shareholders because the shareholders are required to include the dividend in gross income.

Question

Quizplus · Accepted Answer

Corporations are not entitled to a deduction for dividends paid to shareholders; instead, dividends are paid out of the corporation's after-tax profits, and shareholders must include them in their gross income.

A Corporation Is Generally Entitled to an Income Tax Deduction