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

Question

Quizplus · Accepted Answer

Jazz Corporation's dividends received deduction is 80% of the dividend it received from Williams Corp., which is $10,000 x 80% = $8,000. However, since Jazz Corporation's taxable income before the dividend was ($2,000), the dividends received deduction is limited to $2,000.

Jazz Corporation Owns 10 Percent of Williams Corp