The PARENT Corporation received $3 million in dividends from the SUB Corporation. PARENTS income is taxed at

Question:

The PARENT Corporation received $3 million in dividends from the SUB Corporation. PARENT’S income is taxed at a flat rate of 40%. How much tax must PARENT Corporation pay on these dividends if the relationship between the two companies for purposes of the dividends-received deduction is:

a. SUB and PARENT have no affiliation.

b. SUB is 10%-owned by PARENT.

c. SUB is wholly owned by PARENT.

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