Are common stock dividends tax deductible?

I have formed a limited liability company and I am thinking of distributing the profits as dividends to myself and the other shareholders. Are these dividends tax deductible for the company? Can they be included as allowable expenses?

Category: Tags: asked December 2, 2012

2 Answers

No, the dividends that a company pays to its shareholders are not tax deductible. The income has been taxed as corporation tax and how this income is distributed is not relevant for tax purposes (from the company's view point). However, it is taxable as income for the shareholders.

No the dividends for common stock that a company paid are not tax deductible since they are not business expenses. The dividends paid is simply income distribution and are not tax deductible.

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