Canary Corporation, a calendar year C corporation, received an $80,000 dividend from Stork Corporation. Canary owns 18% of the Stork Corporation stock. Assuming it is not subject to the taxable income limitation, Canary's dividends received deduction is $40,000.

Question

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The dividends received deduction (DRD) for a corporation owning less than 20% of another corporation is 50% of the dividends received. Therefore, 50% of $80,000 is $40,000.

Canary Corporation, a Calendar Year C Corporation, Received an $80,000