Jazz Corporation owns 10% of the Williams Corp. stock. Williams distributed a $10,000 dividend to Jazz Corporation. Jazz Corp.'s taxable income (loss) before the dividend was ($6,000). What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

Question

Quizplus · Accepted Answer

The dividends received deduction (DRD) for a corporation owning less than 20% of another corporation is 70% of the dividends received. Therefore, Jazz Corporation can deduct 70% of the $10,000 dividend, which is $7,000.

Jazz Corporation Owns 10% of the Williams Corp