Dividends paid to common stockholders cannot be deducted from the payer's taxable income for tax purposes.
Dividends are property distributions that a business may give you if you own its common stock and hold shares of it. Corporations typically pay cash dividends to shareholders. They may, however, also get payment in the form of stock in another company or any other kind of asset. If you own a partnership, an estate, a trust, a S company, or another entity that is subject to corporate tax, you might also be eligible for distributions. A shareholder may be seen to have earned a dividend if a business pays a shareholder's debt, renders services to the shareholder, or grants access to the company's assets without adequately repaying the corporation. As a result, dividends can only be paid on outstanding common stock shares.
Dividends paid to common stockholders ______ be deducted from the payer's taxable income for tax purposes.
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