Orange Corporation owns stock in White Corporation and has net operating income of $400,000 for the year.White Corporation pays Orange a dividend of $60,000.What amount of dividends received deduction may Orange claim if it owns 15% of White stock (assuming Orange's dividends received deduction is not limited by its taxable income)?
A)$9,000.
B)$42,000.
C)$48,000.
D)$60,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The dividends received deduction for Orange Corporation would be 70% of the $60,000 dividend received from White Corporation, since Orange Corporation owns less than 20% of the White Corporation stock.

$60,000 x 0.70 = $42,000

Therefore, the answer is B, $42,000.

Orange Corporation Owns Stock in White Corporation and Has Net