Payments made to preferred stockholders are treated as a distribution of earnings and therefore are not tax deductible to the issuing corporation.

Question

Quizplus · Accepted Answer

Payments made to preferred stockholders are considered dividends and are treated as a distribution of earnings. Because dividends are not considered a business expense or deduction, they are not tax deductible to the issuing corporation.

Payments Made to Preferred Stockholders Are Treated as a Distribution