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Hey @pcweldon‌ , I don’t fully follow your question.
As you can see from the Basic EPS calculation, preferred dividends of 225,000 was subtracted. In the case of diluted EPS, preferred dividends are not paid (as it’s assumed converted into stock), hence the equation becomes (in this case) = (Net income less non-convertible shares dividends) / (WASO+new shares for convertible stock).
The convertible preferred stock’s dividend is in fact ‘added’ back to the numerator (vs. basic eps, that’s why you don’t see any subtraction of that here since as you say it’s converted to stock). Does this make sense?