Saved Problem 11-33 [LO 11-2 Grffin Corporation recelved $54.000 of dividend Inc

Question

Saved Problem 11-33 [LO 11-2 Grffin Corporation recelved $54.000 of dividend Income from Eagle, Inc. Grffin owns 5 percent of the outstanding stock of Eagle Griffin's marginal tax rate is 35 percent a Calculate Griffin's allowable dividends-received deduction and its after-tax cash flow as a result of the dividend from Eagle b. How would your answers to a change if Griffin owned 55 percent of the stock of Eagle? c. How would your answers to b change if Griffin owned 85 percent of the stock of Eagle? Complete this question by entering your answers in the tabs below. Required ARequired B Required C Calculate Griffin's allovable dividends received deduction and its after-tax cash flow as a resut of the dividend frem Eagle. Dvdends ecelved deduction AtecIax cash fow Required B>

Explanation / Answer

Part a ---

PART B -- Now that that ownership is 55% therefore deduction allowable will be 80% of dividend income.

PART C -- Now that that ownership is 85% therefore deduction allowable will be 100% of dividend income.

DRD = 54000 *    70% = 37800 Net Increase in Taxable Income = 54000 -37800 = 16200 Additional Tax Due = 16200 *    35% = 5670 After Tax Cash Flow = 54000 -5670 = 48330

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