Question

This year, GHJ Inc. received the following dividends.

- BP Inc. (a taxable California corporation in which GHJ holds a 2% stock interest) $21900

- MN Inc. (a taxable Florida corporation in which GHJ holds a 60% stock interest) $83100

- AB Inc. (a taxable French corporation in which GHJ holds a 26% stock interest) $21900

Compute GHJ's dividends-received deduction.

(I keep getting the answer $81810 and it says it's wrong)

Answer 1

As per IRS Publication 542 (01/2019)
Holding %	Deduction allowed of Dividend Income
If Corporation holds less than 20% of domestic corporations stock	50% of Dividend
If Corporation holds 20% or more than 20% of domestic corporations stock	65% of Dividend
If Corporation holds 10% of foreign corporations stock and dividend received after December 31, 2017	100% of Dividend
Name of Company	Holding %	Deduction (%) allowed of Dividend Income	Dividends income received	Deduction allowed of Dividend Income
BP Inc. (a taxable California corporation)	2%	50%	$21,900	$10,950
MN Inc. (a taxable Florida corporation)	60%	65%	$83,100	$54,015
AB Inc. (a taxable French corporation) (Dividend from foreign corporation)	26%	100%	$21,900	$21,900
Total			$126,900	$86,865

So, GHJ's dividends-received deduction is $86865

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