A dividend is a distribution of corporate profits sent to a shareholder.
Let’s say a three-owner C corporation earned $50,000. They kept $20,000 in the business bank account and sent each of the three owners a check for $10,000. The $10,000 checks would be dividend checks. They represent each owner’s fair share of the profits distributed. The dividend checks are not deductible by the corporation, but they are taxable to the recipient.
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