For the current year, Bula Corporation has gross profits from sales of $210,000. It has deductible...
For the current year, Bula Corporation has gross profits from sales of $210,000. It has deductible expenses (exclusive of any special deductions) of $200,000. Bula also received dividends of $130,000 from a U.S. corporation in which it owns 65% of the outstanding stock. For the current year, Bula may claim a dividends received deduction of:
| A. |
$130,000 |
|
| B. |
$84,500 |
|
| C. |
$91,000 |
|
| D. |
$0 |
Homework Answers
Option B 84500$
130000*65% =84,500$
Generally, if a corporation receives dividends from another corporation, it is entitled to a deduction of 50 percent of the dividend it receives. If the corporation receiving the dividend owns 20 percent or more, then the amount of the deduction increases to 65 percent.
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