Question

Riverbend Inc. received a $252,500 dividend from stock it held
in Hobble Corporation. Riverbend's taxable income is $2,550,000
before deducting the dividends received deduction (DRD), a $41,500
NOL carryover, and a $104,000 charitable contribution. Use Exhibit
16-6. **(Round your tax rates to 1 decimal place. Leave no
answer blank. Enter zero if applicable.)**

**EXHIBIT 16-6 Stock Ownership and Dividends Received
Deduction Percentage**

Receiving Corporation’s Stock Ownership in
Distributing Corporation’s Stock |
Dividends Received Deduction
Percentage |
---|---|

Less than 20 percent |
50% |

At least 20 percent but less than 80 percent |
65 |

80 percent or more^{*} |
100 |

* To qualify for the 100 percent dividends received, the receiving and distributing corporations must be in the same affiliated group as described in §1504. The 80 percent ownership requirement is the minimum ownership level required for inclusion in the same affiliated group.

**a.** What is Riverbend’s deductible DRD assuming
it owns 10 percent of Hobble Corporation?

b Assuming the facts in part (a), what is Riverbend’s marginal tax rate on the dividend?

**c.** What is Riverbend’s DRD assuming it owns 53
percent of Hobble Corporation?

**d.** Assuming the facts in part (c), what is
Riverbend’s marginal tax rate on the dividend?

**e.** What is Riverbend’s DRD assuming it owns 92
percent of Hobble Corporation (and is part of the same affiliated
group)?

**f.** Assuming the facts in part (e), what is
Riverbend’s marginal tax rate on the dividend?

Answer #1

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Riverbend Inc. received a $372,500 dividend from stock it held
in Hobble Corporation. Riverbend's taxable income is $2,820,000
before deducting the dividends received deduction (DRD), a $47,500
NOL carryover, and a $146,000 charitable contribution. Use Exhibit
16-6. (Round your tax rates to 1 decimal place. Leave no
answer blank. Enter zero if applicable.)
XHIBIT 16-6 Stock Ownership and Dividends Received
Deduction Percentage
Receiving Corporation’s Stock Ownership in Distributing
Corporation’s Stock
Dividends Received Deduction Percentage
Less than 20 percent
50%...

Riverbend Inc.
received a $267,500 dividend from stock it held in Hobble
Corporation. Riverbend's taxable income is $2,440,000 before
deducting the dividends received deduction (DRD), a $27,750
domestic production activities deduction, and a $137,000 charitable
contribution. (Use Corporate Tax Rate Table.)
(Leave no answer blank. Enter zero if
applicable. Round Marginal tax rate to 1
decimal place.)
a. What is Riverbend’s deductible DRD assuming
it owns 16 percent of Hobble Corporation?
b.
Assuming the facts in part (a), what is...

Riverbend Inc. received a $372,500 dividend from stock it held
in Hobble Corporation. Riverbend's taxable income is $2,820,000
before deducting the dividends received deduction (DRD), a $47,500
NOL carryover, and a $146,000 charitable contribution. Use Exhibit
16-6.
a. What is Riverbend’s deductible DRD assuming
it owns 10 percent of Hobble Corporation?
b. Assuming the facts in part (a), what is
Riverbend’s marginal tax rate on the dividend?
c. What is Riverbend’s DRD assuming it owns 31
percent of Hobble Corporation?...

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)?

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 a a. What is
Riverbend’s deductible DRD assuming it owns 10 percent of Hobble
Corporation?

Riverbend Inc. received a $305,000 dividend from stock it held
in Hobble Corporation. Riverbend's taxable income is $2,380,000
before deducting the dividends received deduction (DRD), a $78,000
NOL carryover, and a $132,000 charitable contribution. Use Exhibit
16-6. (Round your tax rates to 1 decimal place. Leave no answer
blank. Enter zero if applicable.) a. What is Riverbend’s deductible
DRD assuming it owns 10 percent of Hobble Corporation?

Riverbend Inc. received a $305,000 dividend from stock it held
in Hobble Corporation. Riverbend's taxable income is $2,380,000
before deducting the dividends received deduction (DRD), a $78,000
NOL carryover, and a $132,000 charitable contribution. Use Exhibit
16-6. (Round your tax rates to 1 decimal place. Leave no answer
blank. Enter zero if applicable.) d. Assuming the facts in part
(c), what is Riverbend’s marginal tax rate on the dividend?

Riverbend Inc. received a $305,000 dividend from stock it held
in Hobble Corporation. Riverbend's taxable income is $2,380,000
before deducting the dividends received deduction (DRD), a $78,000
NOL carryover, and a $132,000 charitable contribution. Use Exhibit
16-6. (Round your tax rates to 1 decimal place. Leave no answer
blank. Enter zero if applicable.) b. Assuming the facts in part
(a), what is Riverbend’s effective tax rate on the dividend?

Myer Inc. received a $200,000 dividend from stock it held in
Huckabee Corporation. Myer’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.
a. What is Myer’s deductible DRD assuming it owns 10 percent of
Huckabee Corporation?
b. What is Myer’s DRD assuming it owns 60 percent of Huckabee
Corporation?
c. What is Myer’s DRD assuming it owns 85% of Huckabee
Corporation (and is part of the same affiliated...

Griffin Corporation received $50,000 of dividend income from
Eagle, Inc. Griffin owns 5 percent of the stock of Eagle. Griffin's
marginal tax rate is 21 percent.
a. Calculate Griffin's allowable dividends-received deduction
and the tax due from the dividend received from Eagle after
deducting DRD.
b. How would your answers to part a change if Griffin owned 55
percent of the stock of Eagle?
c. How would your answers to part b change if Griffin owned 85
percent of the...

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