Jazz Corporation owns 10% of the Williams Corp. stock. Williams distributed a $28,000 dividend to Jazz Corporation. Jazz Corp.'s taxable income (loss) before the dividend was ($3,800). What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

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13 April, 14:01

Jazz Corporation owns 10% of the Williams Corp. stock. Williams distributed a $28,000 dividend to Jazz Corporation. Jazz Corp.'s taxable income (loss) before the dividend was ($3,800). What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.?

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Kendal Perkins · Answer 1

The amount of Jazz's dividends received deduction on the dividend it received from Williams Corp is $19,600

Explanation:

In this question, the Jazz corporations own 10% of the William corp stock which is less than 20% ownership. So, here dividend received deduction applies which is 70% of the dividend.

In mathematically,

70% of dividend amount which equals to

= 70% * $28,000

= $19,600

The taxable income (loss) before the dividend is irrelevant. Thus, it is ignored.

Hence, the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp is $19,600