Jazz Corporation owns 50% of the Williams Corp. stock. Williams distributed a $10,000 dividend to...

Question:

Jazz Corporation owns 50% of the Williams Corp. stock. Williams distributed a $10,000 dividend to Jazz Corporation. Jazz Corp.'s taxable income before the dividend was $100,000.

What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

A. $0

B. $7,000

C. $8,000

D. $10,000

Cash Dividends

Cash Dividends is a type of incentive being given by a corporation to both its common and preferred shareholders following accumulating enough revenues. Thru consistent cash dividends payout, a corporation will be able to make its business look more profitable to the investing public due to higher rate of return of its shares.

Answer and Explanation:

Answer: C. $8,000

Rationale:

Jazz can deduct 80% of the dividend income he received since his holding to William Corp. is at 50% which is within the range of the aforementioned deductible rate. Hence, the solution for this problem is: 80% x $10,000 = $8,000


Learn more about this topic:

Loading...
Cash Dividends & Dividend Payment

from Finance 101: Principles of Finance

Chapter 16 / Lesson 1
4.4K

Related to this Question

Explore our homework questions and answers library