Phil is reviewing ABC Company's dividend policy as it relates to the firm's shareholders. As part of this review, he wants to divide shareholders into two basic categories in respect to dividend payments. The first group will be shareholders who are taxed on dividend income and the second group will be shareholders who receive some form of tax break on dividend income. Which of the following types of shareholders should be placed in the tax-favored second group? I. Corporate II. Pension fund III. Individuals IV. Trust funds

I only

III only

I and III only

II and IV only

I, II, and IV only