Myer Inc. received a $200,000 dividend from stock it held in Huckabee Corporatio

Question

Myer Inc. received a $200,000 dividend from stock it held in Huckabee Corporation. Myer's taxable income is $2,100,000 before deducting the dividends received deduction (DRD), a $40,00O NOL carryover and a $100,000o 2. charitable contribution. a. What is Myer's deductible DRD assuming it owns 10 percent of Huckabee Corporation? b. What is Myer's DRD assuming it owns 60 percent of Huckabee Corporation? c, what is Myer's DRD assuming it owns 85% of Huckabee Corporation (and is part of the same affiliated group)?

Explanation / Answer

solution:

There are three levels of conceivable findings.

Initially, when DRD is equivalent to 70% of the dividend got.

Second, if the organization getting the dividend possesses over 20% however under 80% of the organization paying the dividend, the DRD is 80% of the dividend got.

At last, if the organization getting the dividend claims over 80% of the organization paying the dividend, the DRD is 100% of the dividend.

In like manner,

Part a. DRD would be 70% of $200,000

          Dividend received = $200,000*70/100

                                           =$140,000

Part b. DRD would be 80% of $200,000

              Dividend received = $200,000*80/100

                                              = $ 160,000

Part c. DRD would be 100% of $200,000

             Dividend received = $200,000*100/100

= $200,000

Dividend received = $140,000

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