e. stock in Hawk Corporation and has taxable income of S1 dividends received ded
ID: 2557728 • Letter: E
Question
e. stock in Hawk Corporation and has taxable income of S1 dividends received deduction. Hawk Corporation pays Eagle a divi I8. Eagle before considering the 5200,000, which was considered in deduction may a. b. $112,000. c. S140,000 d. $160,000. e. None of the above. 60,000 for the year Eagle claim if it owns 15% of Hawk's stock? dend of ived nds recei n owns stock in White Corporation and has net operating income of $400,000 for the 19. Orange Corporatio Comoration pays Orange a dividend of $60,000. What amount of dividends received deduction may Orange claim if it owns 15% of white deduction is not limited by its taxable income) a. S0. b. $42,000. c. $48,000. d $60,000. e. None of the above. (assuming Orange's dividends received Which of the following statements is incorrect regarding the dividends received deduction? a. A corporation must hold stock for more than 45 days in order to qualify for a deduction 20. b The taxable income limitation does not apply with respect to the 100% deduction available c. If a stock purchase is financed 75% by debt, the deduction for dividends on such stock is d. The taxable income limitation does not apply ifthe normal deduction (ie 70% or 80% of e. None of the above. with respect to dividends on such stock to members of an affiliated group. reduced by 75%. dividends) results in a net operating loss for the corporation.Explanation / Answer
Answer
18. B.$112000
Deduction that can be claimed =lesser of % of deduction on dividend received or % of deduction on taxable income.
= lesser of (.70* 200000) or (.70 *160000)
= lesser of 140000 or 112000
= $ 112000
19.B $42000
Deduction can be claimed for = 60,000 * 70% = $ 42,000
If a company owns less than 20% of another company, it is able to deduct 70% of the dividends it receives. If the company owns more than 20% but less than 80% of the company paying the dividend, it is able to deduct 80% of the dividend received. If it owns more than 80% of the dividend-paying company, it is allowed to deduct 100% of the dividends it receives.
20.A
All option are right except:
a. A corporation must hold stock for more than 90 days in order to qualify for a deduction with respect to dividends on such stock.
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