In: Accounting
Turtle Corporation, owns 15% of the stock Metro Corporation and has taxable income of $100,000 for the year before considering the dividends received deduction. During the year Turtle receives a dividend of $30,000 from Metro, which was considered in calculating the $100,000. What amount of dividends received deduction may Turtle claim?
Select one:
a. $0
b. $40,000
c. $65,000
d. $84,500
e. None of these.
Correct answer is e) None of these
Upto the ownership of 20% Dividend received by a corproation from another corporation is allowed for a deduction of 70%. and if ownership is above 20% deduction is allowed upto 85% and more than 80% ownership, 100% deduction is allowed.
In the given situation ownership is 15% in metro corporation.So, dividend received deduction allowed is 70% of $30,000
=$30,000*70%
Dividend received deduction=$21,000