Orange Corporation owns stock in White Corporation and has net operating income of $400,000 for the 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. $27,000
b. $42,000
c. $48,000
d. $60,000
e. None of the above
c
RATIONALE: The dividends received deduction depends upon the percentage of ownership by the corporate shareholder. If Orange Corporation owns 45% of White Corporation, Orange would qualify for an 80% deduction, or $48,000 in this case.
Business
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