The amortization of organizational expenditures and the dividends received deduction are allowed in determining the taxable income of an S corporation.

Question

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S corporations pass through their income, deductions, and credits to their shareholders, who then report these items on their personal tax returns. The amortization of organizational expenditures is allowed, but the dividends received deduction does not apply to S corporations since they generally do not pay corporate income tax on their earnings.

The Amortization of Organizational Expenditures and the Dividends Received Deduction