Question

Genteel Corp. owns a 15-percent stock ownership in Crotchety Corp. Crotchety Corp. pays Genteel an $89,000 dividend. What is Genteel's dividends received deduction assuming Genteel's taxable income is $200,000 before the deduction?

$202,300

$62,300

$140,000

$71,200

25 Which of the following is a professed goal of requiring the Schedule M-3 in lieu of the Schedule M-1?

Increasing transparency between the differences in financial accounting and income tax reporting.

Decreasing audits of high-risk, returns on which corporations take aggressive positions because they are costly and time-consuming.

Increasing the number of overall audits of both low-risk and high-risk returns.

Increasing audits of low-risk returns.

Answer 1

Genteel’s dividends received deductions assuming Genteel’s taxable income before deduction os $89000*70% = $62,300.

Reason: The Dividends Received Deduction lessens, or even removes, that triple layer of tax by giving corporations an extra deduction. Below is the table that shows the dividend received deduction %:

Percentage Ownership in Distributing Corporation	Dividends Received Deduction %
Less than 20%	70%
At least 20%, but less than 80%	80%
80% or more	100%