Preferred dividends are paid with before-tax dollars because the dividend rate is known,whereas common stock dividends are paid with after-tax dollars.

Name: Preferred dividends are paid with before-tax dollars because the dividend rate is known,whereas common stock dividends are paid with after-tax dollars.
Brand: Quizplus
Rating: 4.9 (57 reviews)

Question

Quizplus · Accepted Answer

Preferred dividends, like common stock dividends, are paid out of the company's after-tax profits. Neither type of dividend is deductible for tax purposes by the paying corporation.

Preferred Dividends Are Paid with Before-Tax Dollars Because the Dividend