Regarding the tax treatment of payments to securities holders, it is true that _____.
1. Common stock dividends and preferred stock dividends are not tax –deductible, while interest is tax – deductible
2. Interest and preferred stock dividends are tax – deductible, while common stock dividends are not tax deductible
3. Interest and preferred stock dividends are not tax – deductible, while common stock dividends are tax deductible
4. Common stock dividends and preferred stock dividends are tax- deductible, while interest is not tax – deductible