Azul Corporation, a calendar year C corporation, received a dividend of $50,000 from Naranja Corporation. Azul owns 10% of the Naranja Corporation stock. Assuming it is not subject to the taxable income limitation, Azul's dividends received deduction is $35,000.

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The dividends received deduction is generally equal to 50% of the dividend income for corporations that own less than 20% of the stock of the payor corporation. However, if the recipient corporation owns 20% or more of the stock of the payor corporation, the dividends received deduction is generally equal to 65% of the dividend income. In this case, Azul Corporation owns 10% of Naranja Corporation, so the 50% deduction would apply, resulting in a dividends received deduction of $25,000 (50% x $50,000). However, there is a taxable income limitation that could reduce the deduction amount, but it is not mentioned in the given information. Therefore, assuming it is not subject to the taxable income limitation, the correct answer is A.

Azul Corporation, a Calendar Year C Corporation, Received a Dividend