Since preferred stock has a fixed dividend payment similar to the interest on bonds, preferred dividends are tax deductible under the U.S. tax code.

Name: Since preferred stock has a fixed dividend payment similar to the interest on bonds, preferred dividends are tax deductible under the U.S. tax code.
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Question

Quizplus · Accepted Answer

Preferred dividends are paid out of after-tax profits and are not tax-deductible for the issuing corporation, unlike bond interest payments which are tax-deductible.

Since Preferred Stock Has a Fixed Dividend Payment Similar to the Interest