The interest and dividends paid by a corporation are considered to be deductible operating expenses, hence they decrease the firm's tax liability.

Name: The interest and dividends paid by a corporation are considered to be deductible operating expenses, hence they decrease the firm's tax liability.
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Interest paid by a corporation can be considered a deductible expense, which can decrease the firm's tax liability, but dividends paid are not deductible and do not affect the corporation's taxes.

The Interest and Dividends Paid by a Corporation Are Considered