Can a corporation deduct the dividend payments made to shareholder?

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"
http://philanthropy.ml.com/ipo/resources/pdf/howtoreadfinreport.pdf

Best regards,

Omnivorous-GA

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Request for Answer Clarification by sljames822-ga on 28 Sep 2005 08:04 PDT

So would you say yes or no?

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Clarification of Answer by omnivorous-ga on 28 Sep 2005 08:15 PDT

No.  Absolutely not.