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Dividends are generally treated as ordinary income for individual shareholders. True False

Question:

Dividends are generally treated as ordinary income for individual shareholders.

True

False

Dividends:


Dividends are a portion of profit paid to shareholders by a corporation as a reward for being an investor of the company. The portion of profit to be paid as dividend depends entirely upon the firm's growth policy.

Answer and Explanation:


This statement is true. Dividends, in general, are treated as ordinary income for shareholders whereas qualified dividends are treated as capital gains for tax purposes.


Learn more about this topic:

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Impact of Dividend Distribution on Retained Earnings

from Accounting 302: Advanced Accounting

Chapter 12 / Lesson 2
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