Which of the following statements is most correct?
A)Retained earnings, as reported on the balance sheet, represents the amount of cash a company has available to pay out as dividends to shareholders.
B)70% of the interest received by corporations is excluded from taxable income.
C)70% of the dividends received by corporations is excluded from taxable income.
D)Because taxes on long-term capital gains are not paid until the gain is realized, investors must pay the top individual tax rate on that gain.
E)The corporate tax system favors equity financing, as dividends paid are deductible from corporate taxes.

Question

Quizplus · Accepted Answer

Under the current tax code, 70% of the dividends received by corporations are excluded from taxable income. This is known as the dividends received deduction.

Which of the Following Statements Is Most Correct