New Money Preferred

preferred stock issued after October 1, 1942, when the tax exclusion for corporate investors receiving preferred stock dividends was raised from 60% to 85%, to equal the exclusion on common stock dividends. The change benefited financial institutions, such as insurance companies, which are limited in the amount of common stocks they can hold, typically 5% of assets. New money preferreds offer an opportunity to gain tax advantages over bond investments, which have fully taxable interest. The corporate tax exclusion on dividends is currently 70%.

Previous:	New Money, New Listing
Next:	New York Curb Exchange, New York Mercantile Exchange (NYMEX)