This year, GHJ Inc. received the following dividends. - BP Inc. (a taxable California corporation in...

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)

Solutions

Expert Solution

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

Feel free to ask any clarification, if required. Please provide feedback by thumbs up, if satisfied. It will be highly appreciated. Thank you.

ekkarill92 answered 1 month ago

Next > < Previous

Related Solutions

This year, GHJ Inc. received the following dividends. BP Inc. (a taxable California corporation in which...

This year, GHJ Inc. received the following dividends. BP Inc. (a taxable California corporation in which GHJ holds a 6% stock interest) $ 18,900 MN Inc. (a taxable Florida corporation in which GHJ holds a 42% stock interest) 81,600 AB Inc. (a taxable French corporation in which GHJ holds a 20% stock interest) 18,900 Compute GHJ’s dividends-received deduction.

This year, GHJ Inc. received the following dividends: BP Inc. (a taxable California corporation in which...

This year, GHJ Inc. received the following dividends: BP Inc. (a taxable California corporation in which GHJ holds a 2% stock interest) $ 17,300 MN Inc. (a taxable Florida corporation in which GHJ holds a 52% stock interest) 80,800 AB Inc. (a taxable French corporation in which GHJ holds a 21% stock interest) 17,300 Required: Compute GHJ’s dividends-received deduction.

This year, GHJ Inc. received the following dividends. BP Inc. (a taxable California corporation in which...

This year, GHJ Inc. received the following dividends. BP Inc. (a taxable California corporation in which GHJ holds a 6% stock interest) $ 21,300 MN Inc. (a taxable Florida corporation in which GHJ holds a 55% stock interest) 82,800 AB Inc. (a taxable French corporation in which GHJ holds a 32% stock interest) 21,300 Compute GHJ’s dividends-received deduction.

When are Dividends taxable to a corporation?

In 2020, VQQ Inc. received $350,000 in dividends from Cohen Labratories Inc. VQQ's taxable income before...

In 2020, VQQ Inc. received $350,000 in dividends from Cohen Labratories Inc. VQQ's taxable income before the dividends received deduction (but including the dividend income) AND before a $30,000 charitable contribution deduction is $300,000. What is VQQ's DRD assuming it owns 15% of the Cohen Labratories Inc. stock, as well as its taxable income for 2020? (20 points) Is the DRD a temporary or permanent difference? Favorable or unfavorable? Will it create a deferred tax asset or liability? Briefly explain...

Alex knows that cash dividends are taxable in general. But when he received stock dividends, he...

Alex knows that cash dividends are taxable in general. But when he received stock dividends, he was wondering if the stock dividend is taxable, because he didn't really receive anything other than the stock certificate which only means a piece of paper to him. He wishes to consult you on whether his stock dividend is taxable. How would you answer and what are the questions you may ask Alex, if any, for your accurate and proper consultation?

Comment on the following statement in detail: Dividends received by a corporation on an investment in...

Comment on the following statement in detail: Dividends received by a corporation on an investment in the common and preferred stock of another corporation, where ownership in the dividend paying corporation is less than 20%, is subject to 70 percent exclusion for tax purposes.

The dividends paid by a corporation a. to an individual become taxable income of that individual...

The dividends paid by a corporation a. to an individual become taxable income of that individual b. are tax-deductible, i.e., reduce the taxable income of the corporation c. to another corporation receive preferential tax treatment (70% tax exclusion) d. a and c

Riverbend Inc. received a $327,500 dividend from stock it held in Hobble Corporation. Riverbend's taxable income...

Riverbend Inc. received a $327,500 dividend from stock it held in Hobble Corporation. Riverbend's taxable income is $2,200,000 before deducting the dividends received deduction (DRD), a $62,500 NOL carryover, and a $148,000 charitable contribution. Use Exhibit 16-6. (Round your tax rates to 1 decimal place. Leave no answer blank. Enter zero if applicable.) a. What is Riverbend’s deductible DRD assuming it owns 10 percent of Hobble Corporation? b. Assuming the facts in part (a), what is Riverbend’s marginal tax rate...

Riverbend Inc. received a $372,500 dividend from stock it held in Hobble Corporation. Riverbend’s taxable income...

Riverbend Inc. received a $372,500 dividend from stock it held in Hobble Corporation. Riverbend’s taxable income is $2,820,000 before deducting the dividends received deduction (DRD), a $33,500 domestic production activities deduction, and a $146,000 charitable contribution. A) What is riverbend deductible DRD asuming it owns 16 percent of hobble Corp? B) Assuming the facts in part A what is riverband marginal tax rate on the dividend? c) what is riverbends DRD assuming it owns 31 percent of hobble corp? D)...

Subjects