Question

Jazz Corporation owns 10% of the Williams Corp. stock. William distributed a S10,000 dividend to Jazz Corporation. Jazz Corp.'s taxable income (loss) before the dividend was ($2,000). What is the amount of Jazz's dividend received deduction on the dividend it received from Williams Corp.?

A. $0
B. $5, 600
C. $7,000
D. $8,000
E. None of these.

Answer 1

B. $5, 600

Step-by-step explanation:

The computation of the amount of dividend deduction is shown below;

Here the Jazz corporation owns 10% of the William stock

The dividend deduction percentage would be 70%

And, the taxable income is

= $10,000 - $2,000

= $8,000

Now the amount of dividend deduction would be

= $8,000 × 70%

= $5,600

hence, the correct option is b.