Corporation A receives a dividend from Corporation B. Corporation A includes the dividend in its gross income for tax and financial accounting purposes (no book-tax difference). If A has accounted for the dividend correctly (following the general rule), how much of B stock does A own?

Question

Quizplus · Accepted Answer

Corporations generally include dividends from corporations in which they own less than 20% in both taxable and financial income (dividends are not income for book purposes if Corporation A accounts for its stock ownership under the equity method, which generally begins with a 20% ownership interest).

Corporation a Receives a Dividend from Corporation B