The dividends paid by a corporation to another corporation receive preferential tax treatment.
The dividend is one stream of earnings when invested in equity. The dividend will be distributed from the net income partially. However, some firms would not pay out dividends, which will retain all net income for upcoming investments.
Answer and Explanation:
The answer is FALSE.
The dividends paid by a corporation to another corporation will be treated as an ordinary income and taxed at the current corporate tax bracket.
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from Finance 101: Principles of FinanceChapter 16 / Lesson 1