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Dividends on common stock are usually tax-deductable for paying companies

Dividends on common stock are usually tax-deductable for paying companies

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No, Dividends on common stock are usually tax-deductible for paying companies.

Dividend- It is a part of company's profit that is distributed to the shareholders. Preferred shareholders get the dividend at fixed percentage and whatever is the remaining amount, is given to common shareholders in the form of dividend.

Dividend is not a tax deductible. Companies cannot show it as deduction for taxation purpose because it is not a business expense. It does not have any impact on net income of the company. Dividend is distributed out of the "Profit after tax". Dividend has double taxation; first at corporate level and second at shareholders' level. Shareholders have to pay tax on dividend.

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