Eagle Corporation owns stock in Hawk Corporation and has taxable income of $233,000 for the year before considering the dividends received deduction.Hawk Corporation pays Eagle a dividend of $300,000,which was considered in calculating the $233,000.What amount of dividends received deduction may Eagle claim if it owns 25% of Hawk's stock?
A)$0.
B)$186,400.
C)$240,000.
D)$300,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The dividends received deduction depends upon the percentage of ownership by the corporate shareholder.Because Eagle Corporation owns 25% of Hawk Corporation,Eagle would qualify for a 80% deduction,calculated as shown below.
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Eagle Corporation Owns Stock in Hawk Corporation and Has Taxable