Question

In each of the following independent situations, determine the dividends received deduction for the calendar year C corporation. Assume that Rose Corporation owns 15%, Pansy owns 10% and Daffodil owns 55% of the stock in the corporations paying the dividends.

Rose Corporation Pansy Corporation Daffodil Corporation
Income from operations $1,200,000 $1,200,000 $1,200,000
Expenses from operations (800,000) (1,300,000) (1,500,000)
Qualifying dividends 400,000 400,000 400,000

Required:
a. The dividends received deduction for Rose Corporation is $__________
b. The dividends received deduction for Pansy Corporation is $_____________
c. The dividends received deduction for Daffodil Corporation is $____________

Answer 1

a. The dividends received deduction for Rose Corporation is $ 280,000

b. The dividends received deduction for Pansy Corporation is $ 280,000

c. The dividends received deduction for Daffodil Corporation is $ 320,000

Step-by-step explanation:

a. The dividends received deduction for Rose Corporation would be calculated as follows:

dividends received deduction for Rose Corporation=Qualifying dividends*70%

dividends received deduction for Rose Corporation=$400,000*70%

dividends received deduction for Rose Corporation=$280,000

The dividends received deduction for Rose Corporation is $ 280,000

b. The dividends received deduction for Pansy Corporation would be calculated as follows:

dividends received deduction for Pansy Corporation=Qualifying dividends*70%

dividends received deduction for Pansy Corporation=$400,000*70%

dividends received deduction for Pansy Corporation=$280,000

The dividends received deduction for Pansy Corporation is $ 280,000

c. The dividends received deduction for Daffodil Corporation would be calculated as follows:

dividends received deduction for Daffodil Corporation=Qualifying dividends*70%

dividends received deduction for Daffodil Corporation=$400,000*80%

dividends received deduction for Daffodil Corporation=$320,000

The dividends received deduction for Daffodil Corporation is $ 320,000