Jazz Corporation owns 50percent of the Mitchell Corporation stock. Mitchell distributed a $10,000 dividend to Jazz Corporation. Jazz Corporations taxable income before the dividend was $100,000. What is the amount of Jazz's dividends received deduction on the dividend it received from Mitchell Corporation?

Question

Quizplus · Accepted Answer

Jazz Corporation owns 50% of the Mitchell Corporation stock so it is eligible for a dividends received deduction of 50% of the dividend received, which would be $5,000 (50% of $10,000). Therefore, the correct answer is (C) $6,500, which equals the $100,000 taxable income before the dividend minus the $5,000 dividends received deduction, plus the $10,000 dividend received.

Jazz Corporation Owns 50percent of the Mitchell Corporation Stock