Because the tax code exempts 70% of qualified dividends from federal income taxation if the recipient is a qualified corporation, the major buyers of preferred stock are corporations seeking tax-advantaged investments; these investors are willing to accept a lower dividend rate.

Question

Quizplus · Accepted Answer

The statement accurately describes the tax advantage that corporations receive when they invest in preferred stock.

Because the Tax Code Exempts 70% of Qualified Dividends from Federal