Dividends​:
-  Unless a dividend is declared by the board of directors of a corporation, it is not a liability of the corporation (A corporation cannot default on an undeclared dividend)
-  The payment of dividends by the corporation is not a business expense. (Therefore, they are not tax-deductible)
-  Dividends received by individual shareholders are, for the most part, considered ordinary income by the IRS and are fully taxable (There is an intra-corporate dividend exclusion)

Preferred stock​: represents equity of a corporation, but is different from common stock because it has preference over common in the payments of dividends and in the assets of the corporation in the event of bankruptcy. They have a stated liquidating value (usually 100$ per share). They are either cumulative or noncumulative.
Unlike debt, preferred stock dividends cannot be deducted as interest expense when determining taxable corporate income.
Features:
- Dividends
oStated dividend must be paid before dividends can be paid to common stockholders
oDividends are not a liability of the firm, and preferred dividends can be deferred
indefinitely
oMost preferred dividends are cumulative – any missed preferred dividends have to be
paid before common dividends can be paid - Preferred stock generally does not carry voting rights
2. CORPORATE DEBT AND BANK LOANS
Debt
-  Not an ownership interest
-  Creditors do not have voting rights
-  Interest is considered a cost of doing