Orange Corporation, a calendar year C corporation, owns stock in White Corporation and has net operating income of $400,000 for the current year. White Corporation pays Orange a dividend of $60,000. What amount of dividends received deduction may Orange claim if it owns 45% of White stock (assuming Orange's dividends received deduction is not limited by its taxable income)?
A) $30,000
B) $39,000
C) $42,000
D) $60,000
E) None of the above

Question

Quizplus · Accepted Answer

The dividends received deduction for a C corporation that owns between 20% and 80% of another corporation's stock is 70% of the dividend received. Therefore, Orange Corporation's dividends received deduction is $42,000 ($60,000 x 70%).

Orange Corporation, a Calendar Year C Corporation, Owns Stock in White