Rogers, Inc. owns 12% of Lampe Corporation's voting common stock. During the current year, Rogers generated $50,000 operating income and received $8,000 dividends from Lampe. Only $2,800 of the dividend is taxable.

Question

Quizplus · Accepted Answer

The taxability of dividends depends on the tax laws applicable to the recipient. Generally, dividends received by a corporation from another corporation in which it has less than 20% ownership are subject to a dividends received deduction (DRD), which can reduce the taxable portion. However, the specific amount of the dividend that is taxable cannot be determined without more information about the applicable tax laws and the company's tax situation. The statement provided does not offer enough detail to accurately conclude that only $2,800 of the dividend is taxable.