Red Corporation,which owns stock in Blue Corporation,had net operating income of $200,000 for the year.Blue pays Red a dividend of $40,000.Red takes a dividends received deduction of $28,000.Which of the following statements is correct?
A)Red owns less than 20% of Blue Corporation.
B)Red owns 20% or more,but less than 80% of Blue Corporation.
C)Red owns 80% of Blue Corporation.
D)Red owns 80% or more of Blue Corporation.
E)None of the above.

Question

Quizplus · Accepted Answer

The dividends received deduction is 70% for ownership of less than 20%, which matches the $28,000 deduction on a $40,000 dividend.

Red Corporation,which Owns Stock in Blue Corporation,had Net Operating Income