Identify which of the following statements is true.
A)Perry Corporation, an S corporation, receives $10,000 of dividends from a 25%-owned domestic corporation. Perry is allowed an 80% dividends-received deduction with respect to the distribution.
B)An NOL is incurred by a C corporation in the current tax year. The C corporation makes an S election for the following tax year. The entire C corporation NOL carryover can be passed through to the S corporation's shareholders at the end of the following tax year.
C)Tax-exempt interest earned by an S corporation is not reported to its shareholders because it is excluded from the shareholders' gross income.
D)All of the above are false.

Question

Quizplus · Accepted Answer

Each statement contains inaccuracies regarding tax regulations. A) The dividends-received deduction for a corporation receiving dividends from a 25%-owned domestic corporation is not 80%. B) NOL carryovers from a C corporation cannot be passed through to S corporation shareholders. C) Tax-exempt interest earned by an S corporation must be reported to its shareholders, even though it's excluded from gross income, for purposes of calculating basis and other tax attributes.

Identify Which of the Following Statements Is True