Question

Riverbend Inc. received a $200,000 dividend from stock it held in Hobble Corporation. Riverbend's taxable income is $2,100,000 before deducting the dividends received deduction (DRD), a $40,000 NOL carryover, and a $100,000 charitable contribution. Use Exhibit 16-6. (Round your tax rates to 1 decimal place. Leave no answer blank. Enter zero if applicable.) Problem 16-48 Part e e. What is Riverbend’s DRD assuming it owns 85 percent of Hobble Corporation (and is part of the same affiliated group)?

Answer 1

e)

DRD                                                                              200,000

As it owns more than 80% so entire $200000 is DRD deduction

(it owns 60% which is more than 20% but less than 80%)

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