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Q: Advanced Corporate Income Tax ( Answered 3 out of 5 stars,   0 Comments )
Subject: Advanced Corporate Income Tax
Category: Business and Money > Accounting
Asked by: sljames822-ga
List Price: $2.00
Posted: 28 Sep 2005 07:28 PDT
Expires: 28 Oct 2005 07:28 PDT
Question ID: 573695
Can a corporation deduct the dividend payments made to shareholder?
Subject: Re: Advanced Corporate Income Tax
Answered By: omnivorous-ga on 28 Sep 2005 07:44 PDT
Rated:3 out of 5 stars
Sljames822 --

Under U.S. (GAAP) and IASB rules, dividends are paid from retained
earnings.  As Merrill Lynch's excellent publication, "How to Read a
Financial Report" notes (p. 33 of the PDF document), "federal income
taxes and interest charges must be paid before anything is available
for shareholders."

As a result, even preferred dividends -- which many analysts consider
equivalent to debt -- have to be paid in after-tax dollars and are not
tax deductible (though a bond would be).

Merrill Lynch
"How to Read a Financial Report"

Best regards,


Request for Answer Clarification by sljames822-ga on 28 Sep 2005 08:04 PDT
So would you say yes or no?

Clarification of Answer by omnivorous-ga on 28 Sep 2005 08:15 PDT
No.  Absolutely not.
sljames822-ga rated this answer:3 out of 5 stars

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