In the current year, Azul Corporation, a calendar year C corporation, received a dividend of $30,000 from Naranja Corporation. Azul owns 25% of the Naranja Corporation stock. Assuming it is not subject to the taxable income limitation, Azul's dividends received deduction is $19,500. True

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Thelma

25 August, 07:10

In the current year, Azul Corporation, a calendar year C corporation, received a dividend of $30,000 from Naranja Corporation. Azul owns 25% of the Naranja Corporation stock. Assuming it is not subject to the taxable income limitation, Azul's dividends received deduction is $19,500. True

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Johnathon Douglas · Answer 1

FALSE

Explanation:

In the current year, Azul Corporation, a calendar year C corporation, received a dividend of $30,000 from Naranja Corporation. Azul owns 25% of the Naranja Corporation stock.

Assuming it is not subject to the taxable income limitation, Azul's dividends received deduction is $24,000.

According to the tax law, Dividend received deductions for C corporations can be deducted up to 70% but when the receiving company owns more than 20% but less than 80% of the paying company, the deduction amounts to 80% of the dividend received.

Deduction = 0.8 x 30,000 = $24,000