Question

X corporation (a Colorado C corporation), owns shareholder interests in the following companies: 25% of G...

X corporation (a Colorado C corporation), owns shareholder interests in the following companies: 25% of G Co. (a Colorado C corporation), 5% of H Co. (a Colorado C corporation), 100% of Z Co. (a Colorado limited liability limited partnership). At the end of Year 1, X receives the following distributions of current Earnings and Profits (“E&P”): $100 from G, $50 from H, $200 from Z. What is the dividends received deduction X may claim when filing its year 1 corporate income tax return?

a. $115 b. $315 c. $275 d. $105

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Answer #1
% shareholiding Dividend received Dividend received reduction % Amount $
G Co. 25% 100 80%              80 (100 x 80% )
H Co. 5% 50 70%              35 ( 50 x 70% )
Z Co. 100% 200 100%            200 ( 200 x 100% )
           315

Correct answer is option b ( i.e. $ 315 ).

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