In the current year,Auburn Corporation (a calendar year taxpayer),has the following income and expenses: Auburn Corporation owns 20% of the stock in Blond Corporation.The dividends received deduction for the current year is:

Question

In the current year,Auburn Corporation (a calendar year taxpayer),has the following income and expenses:  Auburn Corporation owns 20% of the stock in Blond Corporation.The dividends received deduction for the current year is:

Quizplus · Accepted Answer

The dividends received deduction is based on the percentage of ownership in the corporation, and the holding period of the stock. In this case, Auburn Corporation owns 20% of the stock in Blond Corporation, which means they are entitled to a dividends received deduction of 20% of the qualifying dividend income received. 
The qualifying dividend income is $800,000, and since Auburn Corporation owns 20% of the stock, their share of the qualifying dividend income is $160,000. Therefore, the correct answer is B) $160,000.

In the Current Year,Auburn Corporation (A Calendar Year Taxpayer),has the Following