Question

Corporate dividends represent: Multiple Choice tax-free income for the recipient because they are distributions of pretax income. tax-free income for the recipient because they are distributions of aftertax income. pretax income from the corporation which becomes taxable income for the recipient. taxable income for both the corporation and the shareholder, whether or not dividends are paid to shareholders. aftertax income from the corporation which becomes taxable income for the recipient.

Answer 1

e. Corporate dividends represent aftertax income from the corporation which becomes taxable income for the recipient.

More about dividends:

Dividend refers to a distribution of a corporation's profits to its shareholders and to use the term distribution to refer to other payments to shareholders, such as payments made when the corporation is liquidated.

Types:

• Cash the most typical and probably the most appreciated type of dividend is cash, which is typically distributed in the form of a check payable to the shareholder.
• Property dividends are the least frequent dividends declared, making them less appealing to shareholders who may not want to receive a variety of the company's goods.
• Share dividends are payments made on the corporation's shares to shareholders in proportion to their individual ownership stakes in the corporation.

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